Tat Hong Holdings, Asia-Pacific’s largest crane-owning company, posted a net profit of S$8.2 million (about U.S. $6.5 million) for its fiscal first quarter ended June 30. The group generated S$175.5 million (about U.S. $138.1 million) for the quarter, an 18-percent decline compared to the same period last year. Gross profit plunged 24 percent to S$63.9 million, a gross profit margin of 36.4 percent, a decline of 2.8 percent compared to the year-ago period.
Tat Hong attributed the decline to the poor performance of PT Worldwide Equipment in Indonesia and crane relocation costs incurred in Australia for a new liquid natural gas project in Darwin. These factors impacted the margins from the crane rental division. Also weaker demand from Singapore and the lowering of margins in Australia contributed, as did weaker demand in the general equipment rental division. Also higher labor cost caused by the tight labor market as well as increased transportation costs for the relocation of cranes affected margins in the tower crane rental division.
“We remain confident about our crane rental business as the dip in revenue in the first quarter was the result of a number of our cranes being off-hire or in the process of being deployed to new projects,” said Roland Ng, Tat Hong managing director and group CEO. “The demand for crane rental services in the region continues to be encouraging, underpinned by a strong pipeline of projects especially in the infrastructure and oil and gas space. In Australia, our committed contracts from the LNG projects should offer good employment for our cranes even as weak economy conditions are expected to prevail in the country.”
“Outside of our crane rental business, pockets of weakness exist especially in our subsidiaries in Australia and Indonesia, which have impacted our overall performance. However, with the remedial actions that we are taking, we expect to mitigate the situation. Barring unforeseen developments, we are cautiously optimistic of our performance for FY 2014.”
Tat Hong is based in Singapore.