Tat Hong reports 33% growth for year to March
29 May 2008Tat Hong made S$640m ($434m) in its financial year to March 31, up 33% year on year. Its net profit after tax, minority interest and one-off gains was S$85m.
The company's crane rental division reported the highest growth of 85% to S$167m, due to improved rental rates and improved utilisation. The crane rental division's gross profits doubled compared with the previous year, to 122.4m.
The group attributed its high utilisation to projects in Malaysia and the Middle East, and wholly-owned subsidiary Tutt Bryant's acquisitions in Australia. Tutt Bryant bought Muswellbrook Crane Services and Bradshaw Ultra Heavy Haulage in the last 18 months. Tat Hong also attributed growth to its two latest acquisitions, general equipment rental firm North Sheridan of Australia and PT Worldwide Equipment of Indonesia.
It said that PT Worldwide's high performance was due to continuing demand for high-value spare parts, load indicators and load testing services.
Roland Ng, Tat Hong president and group chief executive officer, said: "The Asia-Pacific region, including Singapore, continues to see increased governmental spending on infrastructural and energy-related projects. The Middle-East is experiencing a construction boom and there is vast potential for growth in tower crane rental in China.
“Given these promising prospects, we expect Tat Hong to continue to perform well as the Group continues to enjoy better margins from higher rental rates and sales prices and volume increases from higher utilisation of equipment.”
The company operates a fleet of 500 mobile and crawler cranes in the Asia Pacific region.
The company is also a distributor of Hitachi-Sumitomo, Kato, Terex and Link-Belt cranes. It also has a shareholding of publicly-traded tower crane company Yongmao Group. By revenue, half of its business is equipment sales, a quarter crane rental and the rest split between general equipment rental and parts and services.
In a company presentation, Ng said that there are eight main trends and goals for the company. First, crane demand is shifting to larger units, from 80t-150t capacity cranes to 200t-1000t cranes. Second, the group's key markets will remain Singapore and Australia. Third, the company is working to secure more long-term structural rental contracts.
Fourth, it is expanding its tower crane rental business in China, increasing the size of the joint venture rental fleet to 200 units by 2009, and will also expand into new Chinese cities and through acquisitions.
Fifth, it will expand its Australian operations by looking for more mergers and acquisitions. Sixth, it will look to tap into the fast-growing markets of the Middle East, India and China. It is looking to improve its profit margins. Finally, it wants to transform the company into a rental company, with a target of 75% of total gross profit from rental operations.
