Tat Hong’s net profit plummets 61.7% to $4.4m in Q2

Measures to better operating performance are still underway.

In the second quarter of its financial year, Tat Hong suffered through a 61.7% crash in net profit to $4.4m, according to a report by OCBC. However, bottomline was estimated to be comparable to the previous year after excluding one-off items such as FX gains and last year’s $4.48m disposal of subsidiary Hup Hin Transport.

Tat Hong managed to taper operating expenses such that operating margin stood at 10.3%, compared to Q1’s measly 8.2%. Other measures to tighten the company’s purse strings and improve operating performance included implementing wage freeze for Singapore and Australia, lowering staff levels, disposal of under-utilized assets, and strict capex control in conjunction with scaling down unprofitable businesses. Ambitiously, Tat Hong management is confident that more of such measures can be implemented.

The company’s Distribution segment saw growth even though other segments declined. Despite being down 0.9% QoQ, it climbed 12.5% YoY to $54.8m. Sales in Hong Kong, Japan, Brunei and Thailand were better, although Malaysia and Singapore sales dipped. This segment also saw sales of used equipment as part of the group’s fleet reduction exercise.

Meanwhile, Crane Rental sales dipped 2.4% QoQ due to the completion of Australia and Thailand projects, although Hong Kong and Indonesia contributed better utilisation rates and new contracts. Tower Crane Rental segment’s sales inched down 1.3% QoQ as well, although the cranes are now back in use. General Equipment Rental sales inched up 0.9% QoQ, impacted by increased pricing pressures as the depreciation of AUD/SGD.

“On a QoQ basis, overall revenue was down 1.4% and gross profit margin was a tad lower by 0.4ppt to 31.6%,” said OCBC.