Tan Chong bounces back to the black

PETALING JAYA: Despite lower revenue, Tan Chong Motor Holdings Bhd has returned to the black with a net profit of RM12.36mil for the second quarter ended June 30 compared with a net loss of RM23mil in the corresponding period last year.

Consequently, the automotive company posted an earnings per share (EPS) of 1.89 sen compared with a loss per share of 3.52 sen previously.

The automotive company has declared a first interim dividend of two sen per share.

During the quarter in review, Tan Chong saw its revenue declining 9% to RM1.09bil from RM1.2bil previously.

For the first half ended June 30 (1H18), Tan Chong’s net profit stood at RM16.62mil, or 2.55 sen per share, a reversal from a net loss of RM58.32mil, or 8.94 sen per share, previously.

The improvement was driven by its automotive division.

The group’s revenue fell 3.2% to RM2.12bil in 1H18 from RM2.19bil in 1H17.

During 1H18, Tan Chong’s auto- motive division posted an earnings before interest, tax, depreciation and amortisation (Ebitda) of RM101.8mil, up 225.3% year-onyear (y-o-y), despite the 3.9% y-o-y decline in revenue to RM2.07bil on the lower number of vehicles sold.

The higher Ebitda was contributed by a favourable sales mix and better profit margins due to the stronger ringgit compared to the US dollar.

Meanwhile, Tan Chong said its financial services division recorded a higher revenue of RM47.4mil, up 38.2% y-o-y, and Ebitda of RM12.4mil, up 20.5% y-o-y.

The increase in revenue was due to the higher loan book size sustained.

Overall, Tan Chong said its financial position continued to show improvement, as net debt has been reduced 17.1% y-o-y to RM1.09bil and the inventory reduced 10.5% y-o-y to RM1.04bil.

It said it would continue to undertake measures to improve inventory holding management to ensure a sustainable financial position.

Although the business environ- ment is anticipated to remain challenging, Tan Chong said it would expect to perform satisfactorily this year.

“The domestic automotive sector is expected to remain challenging in a highly competitive market and uncertainties due to changes in tax legislations vis-a-vis the reintroduction of the sales and service tax,” Tan Chong said.

It added that it had launched new locally assembled models such as the all-new Nissan Serena S-Hybrid and Nissan Urvan NV350 to improve its competitiveness in the domestic market.

For overseas operations, Tan Chong said, it would continue to follow through on its business strategy of expansion of sales and aftersales network into Cambodia, Laos, Myanmar and Vietnam.

“As part of the long-term strategy to strengthen the group’s position in the regional automotive sector, we will also expand into the commercial vehicles sector with the commercial vehicle plant in Vietnam,” it said.