During Q3, revenue declined 16% from SGD146.1m (USD103.5m) to SGD122.8m (USD87m), which it attributed to lower revenues derived from its equipment sales, and general equipment and crane rental divisions.
Crane rental revenue declined 18% to SGD39.9m, general equipment rental revenue fell 39% to SGD17.6m and equipment sales revenue dropped 12% to SGD43m. These declines, Tat Hong said, were predominantly due to customers maintaining a conservative approach to capital investment and rental decisions.
However, organic growth drove a 21% increase in revenue recorded from its tower crane rental division, and an 11% revenue growth from parts and services.
Tower crane rental revenue increased to SGD8.5m during Q3, with Tat Hong’s tower crane fleet size growing from 252 to 400 year-on-year. It also reported a stable utilisation rate of 77.4% at end of December 2009.
The 11% growth in parts and services revenue to SGD14m was due to increased sales of spare parts and the provision of steel fabrication services in Indonesia, Tat Hong said.
“The global financial crisis and uncertain economic outlook have continued to impact our financial performance this quarter,” said Tat Hong’s president and group CEO, Roland Ng.
“We will maintain our focus on streamlining our operating capabilities and prudent cost management, enhancing our flexibility to tap on the eventual recovery in the market.
“We remain cautiously optimistic of our medium-term outlook, as news of steady growth in the resource sector and resumption of major infrastructure projects in Australia start to surface. We believe that a gradual recovery has started and the positive impact of the various government stimulus packages should begin to filter through,” said Ng.
Net profit improved year-on-year during Q3, reaching SGD11.6m compared to SGD3m in Q3 of the financial year 2009. This was due to a non-recurring pre-tax gain of SGD4.3m in Q3 2010 from the disposal of an equity investment, compared to forex losses of SGD21.7m that adversely affected net profit during Q3 2009.
“We anticipate healthier market demand for our products and services on the back of major resource and infrastructure projects, especially in our major market, Australia, coming back on-stream in the next financial year,” added Ng.
“Furthermore, our continuing investments in China in the last few years, despite the difficult economic condition, have laid the foundation for our future growth. Moving ahead, we will continue to leverage on our core competencies and prudent cost structure to capture the best business opportunities as the market stages a gradual recovery.”
