Proton posts RM591mil loss
PETALING JAYA: Proton Holdings Bhd failed to meet its key performance indicators (KPIs) for the fiscal year ended March 31 (FY07) as revenue dropped 37% to RM4.9bil from RM7.8bil in FY06.
It posted a whopping net loss of RM591.4mil against a profit of RM46.7mil previously. Loss per share stood at 107.7 sen compared with earnings per share of 8.4 sen in FY06.
Among Proton’s KPIs were to generate revenue growth of 12.4% via higher domestic and export sales, and increase earnings before income tax margin to 2.5% from 0.5% previously.
However, during the full year, Proton only managed to sell 110,358 cars, which was a 40% drop from 183,824 units sold in FY06.
The weak performance was attributed to a challenging operating environment, which saw intense competition compounded by lower used-car values and stringent loan application screening that put credit squeeze on prospective clients.
During the fourth quarter (Q4), Proton posted a net loss of RM913,000 from a profit of RM126.9mil in the previous corresponding period.
Revenue slid 29% to RM1.3bil against RM1.8bil previously. Loss per share stood at 0.2 sen against earnings per share of 23.1 sen a year earlier.
Managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said in a statement yesterday that the losses were due to lower sales volume and a combination of other factors, including one-off expenses and provisions.
Among the exceptional items were the right-sizing costs incurred by a subsidiary and higher amortisation of dies and jigs due to unmet volume.
Additionally, there were provisions of claims for the previous year’s project development cost and higher component and raw material costs due to late confirmation of component prices.
While the current financial year remains challenging, Proton intends to focus on operational efficiency, cost competitiveness, introduction of new models and more aggressive marketing campaigns to mitigate the impact of the weak car industry.
“These focus areas will enhance prospects of sales and cashflow, which will help improve the company’s position and restore its financial performance,” Syed Zainal said.
The efforts have already borne some fruit, such as the reversal in sales volume decline in Q4 which showed a 29% increase to 27,458 units from 21,248 in Q3.
Sales operations improved further through enhancement in sales representatives’ practices, pre-delivery inspection and sales service, as well as improved standard operating procedures.
The national carmaker was on track in the current fiscal year to introduce two new models which were potentially high-volume cars that would improve the product portfolio significantly, the statement said.
On the sales network and vendor rationalisation exercise, the combined Proton Edar and EON branch and dealer network would be reduced to 300 outlets by year-end based on performance and location, it said.
In FY07, the carmaker exported more cars, which totalled 20,595 units, compared with 12,526 in FY06.
The statement said demand had been good from the Middle East, Britain and Australia while new markets like Indonesia and South Africa were “showing promise.”
The positive sentiment has prompted Proton to expand assembly operations in Iran and exports are expected to increase further during FY08.
On the strategic alliance, Syed Zainal said the company was in close consultation with the Government and other stakeholders, and that a strategic partner “will consolidate and strengthen our business,” given the added value the partner would bring into Proton’s operations.
It posted a whopping net loss of RM591.4mil against a profit of RM46.7mil previously. Loss per share stood at 107.7 sen compared with earnings per share of 8.4 sen in FY06.
Among Proton’s KPIs were to generate revenue growth of 12.4% via higher domestic and export sales, and increase earnings before income tax margin to 2.5% from 0.5% previously.
However, during the full year, Proton only managed to sell 110,358 cars, which was a 40% drop from 183,824 units sold in FY06.
The weak performance was attributed to a challenging operating environment, which saw intense competition compounded by lower used-car values and stringent loan application screening that put credit squeeze on prospective clients.
During the fourth quarter (Q4), Proton posted a net loss of RM913,000 from a profit of RM126.9mil in the previous corresponding period.
Revenue slid 29% to RM1.3bil against RM1.8bil previously. Loss per share stood at 0.2 sen against earnings per share of 23.1 sen a year earlier.
Managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said in a statement yesterday that the losses were due to lower sales volume and a combination of other factors, including one-off expenses and provisions.
Among the exceptional items were the right-sizing costs incurred by a subsidiary and higher amortisation of dies and jigs due to unmet volume.
Additionally, there were provisions of claims for the previous year’s project development cost and higher component and raw material costs due to late confirmation of component prices.
While the current financial year remains challenging, Proton intends to focus on operational efficiency, cost competitiveness, introduction of new models and more aggressive marketing campaigns to mitigate the impact of the weak car industry.
“These focus areas will enhance prospects of sales and cashflow, which will help improve the company’s position and restore its financial performance,” Syed Zainal said.
The efforts have already borne some fruit, such as the reversal in sales volume decline in Q4 which showed a 29% increase to 27,458 units from 21,248 in Q3.
Sales operations improved further through enhancement in sales representatives’ practices, pre-delivery inspection and sales service, as well as improved standard operating procedures.
The national carmaker was on track in the current fiscal year to introduce two new models which were potentially high-volume cars that would improve the product portfolio significantly, the statement said.
On the sales network and vendor rationalisation exercise, the combined Proton Edar and EON branch and dealer network would be reduced to 300 outlets by year-end based on performance and location, it said.
In FY07, the carmaker exported more cars, which totalled 20,595 units, compared with 12,526 in FY06.
The statement said demand had been good from the Middle East, Britain and Australia while new markets like Indonesia and South Africa were “showing promise.”
The positive sentiment has prompted Proton to expand assembly operations in Iran and exports are expected to increase further during FY08.
On the strategic alliance, Syed Zainal said the company was in close consultation with the Government and other stakeholders, and that a strategic partner “will consolidate and strengthen our business,” given the added value the partner would bring into Proton’s operations.
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