Published November 10, 2011
Tat Hong's Q2 profit soars 78% to $12.6m
Revenue rises 26%; overall gross profit margin was 37.1%
By VEN SREENIVASAN
ROBUST margins and a steady pick-up in business enabled crane specialist Tat Hong Holdings to boost its second-quarter bottom line by 78 per cent to $12.6 million, from $7.1 million a year earlier.
This came on the back of a 26 per cent rise in July-September 2011 revenue to $183.3 million.
The results translated into first-half earnings of $18.1 million, an improvement of 4 per cent over the previous interim earnings of $17.5 million at end-September 2010.
The company declared an interim dividend of one cent per ordinary share and convertible redeemable share.
Nevertheless, the quarterly results mark a steady sequential improvement in the bottom line of the company, from $3.8 million profit during the final quarter of last year, then $5.5 million during the April-June first quarter of the current year and now $12.6 million.
CEO Roland Ng attributed this to steady margin recovery since late last year.
'We have seen an upward trend in business, especially in our crawler crane division and distribution business,' he said. 'We have a sustainable business model which is firing on all cylinders. In fact, we expect things to get even better during the year ahead as our Australian tower crane business starts delivering results.'
Indeed, the company enjoyed growth across all its business divisions, while operating cost increase was kept modest.
Overall gross profit margin was 37.1 per cent.
The distribution business saw a revenue growth of 38 per cent to $89.1 million due to higher sales of excavators to the Indonesian logging industry and the Australian resources sector. Margin for this business was about 20 per cent.
The crane rental business brought in revenues of $53.5 million, but chalked up a gross margin of 58 per cent. The general equipment business had a 77 per cent revenue growth to $26 million, and a strong 56 per cent gross margin.
Mr Ng said that although the tower crane business only contributed some $14.8 million to revenue (a mere 7 per cent year-on-year rise), this was a business with a lot of potential.
'We are well positioned in Australia, where we see strong demand for our tower cranes next year and beyond,' he said.
Roland Ng expressing much more optimistic outlooks for GPM (Gross Margins) and the Tower Crane Biz, in this interview with the reporter than in the SGX announcement.