Tat Hong posts rise

It has also disposed of 9% of construction firm CSC Holdings, reducing the company's ownership to 14.3%. The disposal of shares in what the company calls a 'non-core business' is expected to be worth S$5.7m ($3.8m) to Tat Hong.

“Going forward, we believe that the Group will continue to perform well as a result of better pricing for both sales of new and used equipment, better rental rates and higher utilisation of equipment. Demand continues to be strong, with a limitation of supply of heavy equipment in the Asia-Pacific region. This positive industry outlook is driven by an increase in spending on infrastructure and energy related projects by respective governments in the Asia-Pacific region and the construction boom in the Middle East. Closer to home, we are also optimistic of our growth prospects with up and coming projects in Singapore, such as the Integrated Resorts and Sports Hub,” said Mr Roland Ng, Tat Hong’s President & CEO.

The strong performance by the Group’s Crane Rental and Spare Parts divisions was however affected by: lower general equipment rental activities and cost over-runs on some civil construction contracts in a Kingston division within Tutt Bryant, one of the Group’s subsidiaries.

Tat Hong continued to enjoy robust crane rental, boosted by the continuing strong demand from the oil & gas and energy sectors in Australia and oil & tanking projects in Indonesia. Crane rental revenue for the quarter increased by 21% to S$20.5 million. Cumulatively, the Group achieved a stronger improvement, with a 28% increase in crane rental to S$40.3 million in the 2007 fiscal half year, from S$31.6 million in the last corresponding period. Increasing sales of high value items such as booms and undercarriage to countries such as India, the Philippines and Indonesia gave a 16% boost to its Spare Parts division with a revenue of S$10.1 million for 2QFY2007. At mid-year, the cumulative revenue for the division added up to S$19.2 million, an increase of 11% from S$17.2 million in the last corresponding period.

However, these strong performances were dampened by some problems encountered at Tutt Bryant in Australia. Cost over-runs on some civil construction contracts in its Kingston operations, as a result of a competitive market place and staff turnover, created a lack of engineering continuity on those projects. Remedial actions, including the appointment of an engineering manager to initiate positive changes to project management and to improve costs control have been implemented. These are expected to improve future margins.

“Tat Hong will continue to shift its focus towards bigger capacity cranes for both the rental and equipment sales markets so that we can optimise returns during this period of increased spending on infrastructure and boom in the oil & gas and energy sectors. “We are also looking at securing more long-term structured contracts and M&A opportunities to expand our operations in Australia as well as in the region,” said Ng.

With more than 500 mobile and crawler cranes, Tat Hong claims to be the largest crane company in the world (in terms of quantity of crawler cranes) and serves a diversified range of industries such as infrastructure, oil & gas, pharmaceutical and construction. Tat Hong is principally engaged in four core activities - the rental of cranes, general rental of equipment, sale of cranes and other heavy equipment, and sales of spare parts for these equipment.

Through the acquisition of Kingston Industries Pty Limited, a company that ranks amongst the top 500 private companies in Australia, the Group also provides plant hire, compaction services, railway maintenance and heavy haulage in New South Wales, Queensland and Western Australia. The Group has delisted from the Australian Stock Exchange on November 24, 2005 and maintains its primary listing on The Singapore Stock Exchange. Its Australian subsidiary, Tutt Bryant Group Limited, was listed on the Australian Stock Exchange on December 15, 2005.