Tat Hong revenue down
By Laura Hatton04 September 2014
Crane company Tat Hong Holdings (Tat Hong), based in Singapore, has released its financial results for the first quarter of the full year 2015.
The company reported a net profit of S$6.0 million for the fiscal first quarter results for the three months ending 30 June 2014.
Total revenue generated by the company for first quarter full year 2015 was $164.2 million, a 6 % decline year-on year.
Cost reductions in the previous year and lower activity levels helped reduce the company’s total operating expenses by 7.6 % to $48.4 million in first quarter full year 2015. Cost savings were, however, reduced by higher net foreign exchange losses of $1.3 million, an increase in provision for debts amounting to S$0.5 million and an increase in rental commission and sales expenses of S$0.3 million, the report added.
Despite increased profit from areas in Australia and China, first quarter full year 2015, the company posted net profit of $6.0 million, a 28 % decline compared with the same period last year. Losses from Indonesian operations, offshore and marine units, plus lower rental incomes, contributed to the decline.
Roland Ng, Tat Hong’s managing director and Group CEO, said, “We are pleased to note a turnaround in our Australian operations which benefited from increased crane rental activities primarily to LNG-related projects as well as cost containment measures implemented last year. Our tower crane rental business in China continued to perform well with a strong pipeline of projects. However, losses in our Indonesian subsidiaries have yet to be fully contained and this, together with the losses from our offshore and marine unit and lower profit contribution from the crane rental business in Singapore impacted our profitability for the quarter under review.
“Whilst we are cautiously optimistic of our performance going forward, we do face pockets of weakness such as the slowing construction sector in Singapore, project delays and cost pressures. The marketplace is also getting more crowded and competitive compared with a few years ago. However, the infrastructure needs of Asia and Australia are immense and it will continue to drive the demand for our crane rental and tower crane rental services.”
Revenue generated from the company’s crane rental division declined by 4 % from $68.8 million to $66.3 million in the same period in the previous year. With help from a fleet increase of 953 tower cranes, revenue generated by the tower crane rental division rose 21% to $24.5 million. Utilisation rate also increased 80 % compared with 73 % a year earlier, the report said.
The company’s rental sector fell 20 % from $20.5 million in the first quarter of the full year 2014 to $16.3 million for the same period for the full year 2015. Weak demand from the mining sector, reduced public spending in Queensland and overall subdued activities in Australia, contributed towards this decline.
In the report, the company stated that the crane rental subsidiary Hup Hin Transport will no longer contribute to the crane rental division. In addition, trading conditions for the distribution division is expected to be a challenge due to the Australian economy and a weak demand for heavy equipment in the region.
The general equipment division is, however, expected to do well with the announcement of several large infrastructure projects in Australia, the report added. In addition, the tower crane rental division is expected to maintain its growth due to increased government spending on rail infrastructure and nuclear power plant projects.