Written by Joseph Chin
Wednesday, 18 November 2009 21:37
KUALA LUMPUR: TAN CHONG MOTOR HOLDINGS BHD [] net profit in the third quarter ended Sept 30 slipped to RM34.43 million, down 64% from a high base of RM95.42 million a year ago, but it expected fourth quarter to be better.
It said on Wednesday, Nov 18 that revenue fell to RM745.77 million, down 25.4% from RM1 billion a year ago. Earnings per share were 5.27 sen compared with 14.3 sen.
"From a high base of comparison against the strongest quarter in 2008, net income after taxes in 3Q 2009 appears to be down 63.3% year on year. But since 4Q 2008, quarter on quarter: sales, productivity and profitability trends, are stabilising albeit improving," it said.
Tan Chong said currency volatility accounted for much of the operating profit variance. Production cutbacks in 1Q and 2Q 2009 followed by a global shortage of inventory in 3Q further compounded the negative variance.
"Net profit margins appear to have bottomed at 4.6% in 3Q 2009. However, 4Q 2009 could be unusually resilient in a seasonally weaker year-end period.
"Besides an order backlog carried forward from September 2009, 4Q is likely to benefit from a stronger ringgit. Since it peaked on March 2, 2009, the US dollar has meaningfully weakened from a high of RM3.728 whilst the yen has remained volatile," it said.
Tan Chong said it was looking beyond economic cycles to invest in sustainable increases. Other mesures were structural improvements to reduce costs and broaden its target market.
It added investments in new products and new capacity, both software and hardware, have begun
in earnest.
