Proton Holdings Bhd yesterday announced a net loss of RM341.5mil for its fourth quarter ended March 31 as write-downs and impairments dragged down the company’s financial performance that has already been hurt by a slowdown in sales.
Group chairman Datuk Mohd Nadzmi Mohd Salleh said Proton’s performance reflected the current global economic condition.
“The softening of the automotive industry arising from the global financial crisis had also adversely affected the performance of the group in the second half of the financial year,” he said in a statement.
For the fourth quarter, Proton posted an 18.4% drop in revenue to RM1.4bil and net profit swung into the red with a loss of RM341.5mil from a profit of RM217.5mil.
“The main reason for the group loss was Proton’s decision for the impairment of property, plant and equipment (PPE) and inventory write-down for certain models impacted by volume contraction,” said Nadzmi.
“Additionally, the results for the second half of the financial year had also been adversely affected by the accelerated amortisation of certain dies and jigs as well as the increased costs of components and raw materials arising from higher foreign currency exchange rates, particularly, the Japanese yen and the US dollar,” he added.
The write-downs and provisions cost Proton RM360mil during the fourth quarter and the company also sold 34,490 cars compared with 40,903 in the same period last year.
Nadzmi added that Proton was now reassessing its production volume after the contraction in sales during the current economic times.
For this financial year, Proton is expected to receive a research and development grant from the Government under the National Automotive Policy amounting to RM81mil.
For the full year, Proton posted a net loss of RM320.3mil, or 58.3 sen a share, compared with a profit of RM184.6mil, or 33.6 sen a share.Revenue for the year rose to RM6.49bil from RM5.62bil previously.
Proton managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said Proton’s balance sheet remained healthy despite the loss and that cash reserves at the end of the quarter stood at RM899.5mil compared with RM1.17bil last year.
“As a fully fledged automotive company, we spent a substantial amount on the development of new models such as the Proton Exora and Lotus Evora during the year. While this had affected our cash reserves, we will be able to recover when the cars are sold,” said Syed Zainal.
The Proton Exora has received bookings totalling 11,000 units.
“The Exora has also given Proton the opportunity to tap into a new segment – the MPV segment, which has a lot of potential and could help improve Proton’s market share and overall volume growth,” he said.
“Following the success of the Exora in the domestic market, we are now planning to launch the MPV in the Indonesian market in July, which has a sizeable middle-class market and is predominantly an MPV market.”
Proton recently reached an agreement with Edaran Otomobil Nasional to rationalise its distribution network that will see the number of dealers reduced to 191 and service centres to 224.
The company said the exercise would allow it to have better branding and improve on its after-sales services.
In addition to expanding the local market, Proton has also put into place a strategic plan to focus on building its export markets.
“Besides having a strategic partnership with Zagross Khodro for the CKD (completely knocked down) assembly of the Wira and more recently the Gen.2 models in Iran, we have also entered into a business relationship with Youngman of China for the CBU supply of our Gen.2 and Persona models, which is sold and distributed in China under Youngman’s Europestar badge, potentially leading to CKD assembly operations,” said Syed Zainal.
“We are also finalising our India strategy by the end of the year and we are indeed excited with these prospects in making Proton cars available and more visible in the overseas markets as this will hopefully enhance our revenue,” he said.
He said exports to foreign markets were expected to improve in the future and represent a significant portion of Proton’s sales.
“In terms of volume, we are aiming at doubling our total sales volume by 2010, of which the bulk will be derived from the export markets,” he said.
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