Presenting the Singapore-based company’s results for Q2 2007–08, CEO Roland NG attributed the rise in crane rental revenues to higher rental rates from cranes from all capacities and most countries. He added that continuing strong demand from the oil and gas, and energy sectors, and from a new subsidiary, Muswellbrook Cranes Services Pty Ltd, added to revenues in Australia. The company was also helped by higher utilisation rates due to ongoing major projects.
In Q2 2006–07, crane rental accounted for 19.5% of the company’s revenues, while equipment sales contributed 52.6%. This quarter, the contribution from crane rentals increased by 8.6 percentage points to 28.1%, while the share of revenues from equipment sales slipped 6.3 percentage points to 46.3%.
Gross profit figures tell the same story: in Q2 2006–07, crane rental contributed SGD13.6m (USD9.4m), while equipment sales brought in SGD8.8m (USD6.09m). This year, quarterly crane rental gross profits had put on SGD18.7m (USD12.94m) to reach SGD32.3m (USD22.35m), while equipment sales had only risen SGD5.9m (USD4.08m) to SGD14.7m (USD10.17m). The worldwide shortage of equipment helped push gross profit margins up 39%, from 29.2% last year, to 40.6% this year.
Overall, gross profits for the quarter rose 112% year-on-year, from SGD30.8m (USD21.31m) in Q2 2006–07 to SGD65m (USD44.98m) in Q2 2007–08, on revenues up 52% to SGD160.2m (USD110.86m), from SGD 105.2m (USD72.8m). The group’s earnings per share increased by 126%, from SGD2.00 cents (USD1.38c) to SGD4.52 cents (USD3.12c).
Ng identified a shift towards rentals as a key part of the company’s ongoing strategy, saying that the company planned to achieve 75% of gross profits from rentals within three years. As part of this strategy, the company will increasingly concentrate on higher capacity, 200t–800t cranes.
While Singapore remains a key market for Tat Hong, it will seek to grow its tower crane rental business in China, with the aim of increasing its joint venture fleet size in the country to 200 units by 2008, and the target of having the People’s Republic account for 20% of Tat Hong’s bottom line by 2010.
The company will use Tutt Bryant Group to seek new merger and acquisition targets in Australia, and will seek to expand its rental operations in the country, with the aim of having 20 hire stores in the country by the end of the year. It is also seeking growth in the Middle East, India, China, Vietnam and Indonesia.
