Proton Holdings Bhd posted a net profit, albeit one of its smallest in its 20-year history, of RM47.02 million in the year ended March 31, 2006 despite significant losses in the first two quarters.
It was a sharp drop from a net profit of RM442.44 million in the previous year, due to lower sales and higher allowances for doubtful debts and promotion costs.
The fall was also due to higher components cost and allowance for stock obsolescence, and 28% lower income figures from associated and jointly controlled entities.
Proton recently lost out to Perodua in the national car market, with a 30% share compared with Perodua's 44% last month. Proton rolled out its first vehicles in 1985 and started making profits in 1991.
The full year results were boosted by the performance of the fourth quarter, in which it recorded a net profit of RM127.2 million on the back of revenues totalling RM1.8 billion.
In the fourth quarter, it registered a pre-tax profit of RM95.3 million, marginally lower than RM96 million profits in 3Q ended December 2005.
Its managing director Syed Zainal Abidin Syed Mohamed Tahir said it was a marked contrast to (pre-tax) losses of RM4.3 million and RM158.8 million in the first and second quarters, respectively. It made a net profit of RM86.51 million in the third quarter.
"Compared to 4Q last year which saw the national car company making a (pre-tax) loss of RM202.6 million, Proton made a relatively strong comeback despite what was described as a “challenging year”," he said.
He said the latest quarterly results reflected a more financially-resilient Proton as a result of tighter cost control despite a nationwide dip of 9% in sales of passenger cars.
Speaking at a media briefing in Shah Alam yesterday, he said the Satria replacement model to be launched early next month was expected to boost sales. "This will be supplemented by the introduction of two more new models before the new financial year is out.”
He said Proton was considering producing Wira cars in Indonesia when it stopped local production of the model.
Syed Zainal said Proton was still in talks with Volkswagen over potential strategic alliance. "We are still reviewing and studying objectively whether it is in our programme line-up or not."
He said Proton hoped to conclude discussions soon with PSA Peugeot-Citroen for a possible alliance, which would be different from the tie-up with Mitsubishi Motor Corporation, as it would be more “elaborate” in terms of new models.
Syed Zainal said Proton was a logical partner as PSA wanted to penetrate the Asean market. On whether talks include an equity stake in the national carmaker, he said: “It’s hard to say.”
On the tie-up with Mitsubishi, he said Proton was already in “advanced stages” of concluding the feasibility studies on their alliance, which he hoped to do so by next month.
He said Proton was also interested to export its cars to Thailand and was exploring a possible alliance in India. “We are finalising discussions with the Indian partner.”
On the outlook, Syed Zainal said: “Intense competition in both domestic and export markets are expected to continue to put pressure on Proton’s sales and profitability.
“Compounded by higher oil price and increase in electricity tariff, purchasing power will be further depressed, resulting in a margin squeeze for Proton.
“In addition, the hardening of interest rate and tighter credit control by financial institutions will continue to dampen car sales,” he said.