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PROTON POSTS RM12 MILLION PROFIT BEFORE TAX IN Q1 2011/2012
PROTON Holdings Berhad last week announced an unaudited Group profit before taxation of RM12 million for the first quarter of its 2011/12 financial year ending 31 March 2012 against a profit of RM105 million posted in the corresponding period last financial year. During the quarter under review, the Group registered revenue of RM2.23 billion compared to RM2.29 billion recorded during the corresponding period in the previous financial year. The decline in profit is largely attributable to higher expenses incurred by Lotus Group International Limited (LGIL) in the rebuilding of its brand and restructuring costs in the current quarter.
LGIL is on target with its business plan and achievements to date are in line with thecompany’s five-year business transformation exercise. This includes the firing of the new V8 engine – which took place last week, full completion of the new Formula One grade test track facilities in Hethel, presence of a merchandising web store with an extensive range of exclusive quality goods and near completion of its new factory building to accommodate the production of new models.
The higher spending at LGIL, however, was partially offset by higher revenue from an increase in PROTON’s domestic sales volume, which was approximately 3 percent higher in the current quarter as compared to the corresponding period last year.
However, when compared against the preceding quarter, the Group experienced a lower overall sales volume in the current quarter. This decline was due to the normalisation of sales of the Inspira following its successful launch late last year. The Group also saw a drop in the financing approval rates by local financial institutions in June 2011, as a result of the Hire Purchase Act 1967 (HPA) amendment implementation in the same month.
PROTON Holdings Berhad Group Chairman Dato’ Sri Mohd Nadzmi Mohd Salleh said PROTON is aggressively spearheading the transformation of LGIL. The latest development has been the signing of a new distributorship agreement in China which is also one of the fastest growing premium sports car markets in the world. The appointed dealer, Lotus China Symphony Ltd, will invest in new dealerships throughout the country to offer a full range of high performance Lotus cars to the Chinese market. LGIL has also recently appointed new distributors in Australia and New Zealand.
Dato’ Sri Mohd Nadzmi added that the Group is encouraged by positive developments in large markets such as India and China. “These factors, together with our efforts to tap into various other new and emerging markets, will spearhead PROTON’s global exercise. The primary focus will be on offering customers good quality, reliable, exciting and value for money products backed by strong after sales service, a formula that has enabled models like the Exora MPV for example, to successfully attract the interest of buyers in competitive markets such as Indonesia and Thailand. In fact, in May 2011, the Exora won Best Budget MPV of The Year at the Indonesia Automotive Awards.”
The Group is currently finalising the development of the CFE engine, as well as preparations for the production of a new model – codenamed the P3-21A, in the first quarter of 2012. The Group had announced last month, its Production Preparation Readiness at the Tanjung Malim plant where the car will be manufactured.
“PROTON will continue to invest in the development of new technologies and improve our operational efficiencies to sustain earnings while at the same time, remaining cautious of the unpredictability in the global markets, particularly, the anticipated volatility of foreign currencies and fluctuations in fuel and raw materials prices,” he said.
On the domestic front, although the economic outlook is expected to grow at a slower pace, the Group is cautiously optimistic with its sales target for the rest of the financial year.
“We are expecting an improvement in sales figures as normalisation in bank approval rates stabilises after concerns relating to the Hire Purchase Act 1967 (HPA) amendments have been addressed, especially in light of the reassurance by the Minister of Domestic Trade, Cooperatives and Consumerism recently,” said PROTON Holdings Berhad Group Managing Director Dato’ Sri Haji Syed Zainal Abidin Syed Mohamed Tahir, who also pointed out that the recent MAA report indicated a 20 percent increase in July sales after a slower June.
Dato’ Sri Haji Syed Zainal Abidin added that as the Malaysia Automotive Association (MAA) has revised its total industry volume (TIV) forecast in 2011 from 618,000 to 608,000 units, and despite this modest cut, the current forecast for 2011 is still projected to be higher than TIV recorded in 2010. “We are also hoping to see the numbers boosted, with planned launches of new models and improved overall buyer sentiments in the domestic market in the second half of 2011.
“As for PROTON, the Group will intensify its sales and marketing activities for the current product offerings, to increase sales volume, as well as to increase the Group’s income from after sales-related products and services,” he said.
PROTON’s unaudited cash and bank balances balance as at 31 June 2011 remain healthy at RM1.41 billion.
FINANCIAL HIGHLIGHTS OF Q1 2011/2012 (As at 30 June 2011)
2011/2012
(30/06/2011)
RM’000
2010/2011
(30/06/2010)
RM’000
Profit before taxation – individual
12,107
104,649
Revenue (Q1) – individual
2,233,345
2,289,887
Cash, bank balances & deposits (unaudited)
1,413,260
1,594,285
Total Current Assets (unaudited)
4,126,858
3,716,371
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