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PROTON Holdings Bhd (5304) posted a net loss of RM74.6 million in its third quarter ended December 31 2008, compared to a net profit of RM10.3 million in the corresponding period of the previous year, as car sales slumped amid the global financial crisis.

“The financial crisis and its impact on the global car market and appreciation in foreign currency rates would continue to impact the group’s profitability,” the national carmarker said in a statement to Bursa Malaysia.

Chairman Datuk Mohd Nadzmi Mohd Salleh said the group’s loss was due to the contraction of vehicle sales as buyers turned cautious in the face of the economic downturn.

“Proton’s domestic sales volume declined by 15 per cent compared to the immediate preceding quarter.
“Correspondingly, the group’s revenue for the quarter declined to RM1.5 billion from RM1.8 billion in the preceding quarter mainly due to lower sales volume,” he said in a statement.

Mohd Nadzmi said the loss was compounded by higher foreign currency exchange rates, particularly the Japanese yen and US dollar. The group also incurred higher raw material and component costs.

Proton managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said the Malaysian automotive industry is expected to face increasingly challenging conditions due to the ongoing global financial crisis.

The group posted a net profit of RM21.1 million for the nine-month period, compared to a loss of RM32.9 million previously.

Revenue for the same period improved by 30 per cent to RM5.1 billion compared to RM3.9 billion before.

A total of 122,355 Proton cars were sold in the nine-month period compared with 99,039 units in the same period of the previous year.

Proton is optimistic about the prospects for the new Proton Exora, a home-grown multi-purpose vehicle which will be launched in mid-April, Syed Zainal Abidin said.

Proton has received firm bookings for more than 800 units of the Exora since bookings opened on February 21.

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Malaysia has registered a growth of 4.6 per cent for 2008, Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak announced yesterday.

The earlier gross domestic product (GDP) target for 2008 was 5 per cent. GDP growth in 2007 was 6.3 per cent.

Najib said the slower growth was due to the worsening global economy that had caused a significant drop in the country’s exports.

“The global economic scenario is getting more critical and a prolonged recession is expected,” he said at a press conference in Putrajaya yesterday.

For the October-December period, Malaysia’s GDP grew 0.1 per cent compared with 4.7 per cent in the third quarter. This was the lowest quarterly GDP growth since 2001, but still credible compared to other economies that were hit worst by the global economic crisis.
Singapore’s economy contracted 4.8 per cent in the fourth quarter, bringing 2008 GDP growth to just 1.1 per cent. Japan recorded minus 4.6 per cent growth in the fourth quarter and minus 0.7 per cent for the full year.

Malaysia’s manufacturing sector contracted by 8.8 per cent from a growth of 1.8 per cent in the third quarter due to weaker demand for electronic and electrical products.

Najib said the services sector grew 5.6 per cent, while the manufacturing, mining and construction sectors recorded negative growth of 8.8 per cent, 5.7 per cent and 1.6 per cent respectively.

Agriculture activities, meanwhile, saw a lower growth of 0.5 per cent due to a moderate increase in crude palm oil production (3.6 per cent) and a significant reduction in rubber production (-28.4 per cent).

He said it is unlikely that the current quarter will see any improvements.

“Of course it all depends on the situation in the US and Europe. We have to see the effectiveness of the fiscal stimulus and efforts to revive the banking sector in US.

“However, all signs indicate deeper and more prolonged recession, as even IMF (International Monetary Fund) and most countries have revised economic growth projections, including Singapore which did it four times,” Najib said.

He said the mini-budget to be tabled in Parliament on March 10 would help cushion the impact of a global recession on Malaysia, as the country would go into full gear to increase GDP growth by stimulating domestic demand. – BTimes

This would be complemented by other initiatives, including easier monetary policies. The fiscal deficit for this year would be maintained at its earlier estimate of 4.8 per cent of gross national product.

The government would likely revise its earlier GDP projection of 3.5 per cent for 2009, as it was no longer sustainable in view of the weakening external economic environment.

Najib said a new GDP target for the year would be announced on March 10.

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Budget carrier AirAsia Bhd (5099) made its second consecutive quarterly loss of RM176.9 million for its fourth quarter, as it took a hit from an exceptional item loss of RM426 million.

Group chief executive officer Datuk Seri Tony Fernandes said the loss was attributed to AirAsia completely unwinding all its remaining fuel hedges and some of its interest rate swap (IRS) derivative structures.

But by doing so, Fernandes said, AirAsia will be better positioned this year to deal with oil prices having fallen and lending rates reduced.

“If we cut our losses now, we will recover very quickly if oil prices remain around US$40 per barrel. Also, we fixed our IRS at 3.25 per cent to 5.2 per cent for roughly 12 years two years ago, not anticipating the current global situation,” Fernandes said in a conference call with analysts yesterday.

He remains bullish on AirAsia’s outlook, expecting a 15 to 20 per cent increase in AirAsia passengers for 2009 due to routes expansion to China, India and Singapore.
“We will also launch aggressive promotional campaigns and enhance customer service delivery to counter the weak global economy. The focus is on maintaining high load factor, driving ancillary income and expanding market share,” he said.

The aim is to increase ancillary income contribution from nine per cent to 15 per cent in relation to overall revenue contribution.

Revenue for the three-month period ended December 31 2008 grew 32 per cent to RM838.3 million from RM632.7 million one year ago.

This was due to higher passenger volume by 21 per cent to 3.3 million and higher contribution from ancillary income by 78 per cent to RM73.8 million

Its core operating profit doubled to RM194 million compared with the previous corresponding period.

For the first time since its listing in 2004, AirAsia posted a net loss of RM471.7 million for its full year ended December 31 2008 due to losses of RM641 million in unwinding its fuel and IRS derivatives structures.

This was a 167 per cent plunge from its net profit of RM697.6 million a year ago.

“In relation to fuel, we are now completely un-hedged for 2009. We will ride the market this year and if we do hedge for 2010, it will be clean vanilla swaps,” Fernandes said.

Revenue for the full year grew 37 per cent to RM2.64 billion as passenger volume grew 22 per cent to 11.8 million. Its load factor for last year was 75 per cent.

AirAsia expects it affiliates Thai AirAsia, Indonesia AirAsia and AirAsia X to perform better this year and contribute positively to the group.

Meanwhile, Fernandes said he is optimistic that operating costs in the soon-to-be-built permanent low-cost carrier terminal (LCCT) will be lower.

AirAsia has had five meetings with airport operator Malaysia Airports Holdings Bhd (MAHB) so far on the new LCCT, to be built at the Kuala Lumpur International Airport in Sepang.

“We are confident we will resolve our discussions with MAHB within the next week or so,” he said.- BTimes

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