Tat Hong books $39.8m net loss in Q4

Blame it on forex losses, asset impairment costs.

Tat Hong has sunk deeper into the black in 4QFY16, as the company booked a $39.8m net loss during the quarter versus its $17.1m net loss in 4QFY15.

According to a report by OCBC, Tat Hong attributes this to several factors including $7.7m in forex losses. The firm was also slammed by $32.5m in goodwill and asset impairment charges mainly relating to its wholly owned Australian subsidiary, and an associated company.

On a full year basis, Tat Hong saw a net loss of $39.3m, in contrast to a net profit of $4.9m in FY15. This is on back of forex losses of $14.9m versus forex gain of $12m in the preceding year.

In Q4, the firm’s tower crane rental segment was the only division that saw positive YoY sales growth of 4%, as well as raised gross profit margin of 37.7%. This was bolstered by improved utilisation rates due to new projects commenced. On top of this, the quarter saw lower depreciation and crane operator expenses.

Moving forward, Tat Hong sees sustained weakness in demand in most of its markets.

“The tepid outlook for the industry will likely continue to weigh on earnings recovery, while the group’s share price may be supported to some extent for now in view of a possible transaction that may or may not lead to an acquisition of its issued share capital,” OCBC reports.

“Meanwhile, we expect further scaling down of noncore, unprofitable businesses among other measures to improve their operating performance,” adds OCBC.