SINGAPORE (Feb 14): Crane rental company Tat Hong Holdings has swung back to profitability in 3Q with earnings of $0.2 million, thanks to higher operating income, a one-off gain on disposal and lower operating costs.
This is a turnaround from its net loss of $6.7 million in the corresponding quarter last year.
Revenue for the quarter declined 3% to $121.5 million compared to the $124.8 million posted a year ago.
Revenue contributions from its crane rental division fell 35% to $30.3 million from $46.5 million in 3Q16.
But Tat Hong’s distribution division reported the highest growth in revenue contributions at $52.2 million, up 21% from $43.3 million in the previous year.
Gross profit for the period fell 18% to $31.5 million, representing a gross profit margin of 25.9% compared to 30.6% achieved a year earlier.
The decline in gross profit margin was largely due to lower margins from the crane rental division, which reported lower utilisation rates in Singapore and Australia. The group’s tower crane rental division also incurred additional costs for the completion of projects on schedule, but this was partially mitigated by better margins from the distribution and general equipment rental divisions.
Other operating income increased to $16.3 million from $3.6 million posted in 3Q16, primarily from a $5.2 million gain on the disposal of a property in Australia, as well as the disbursement of $6.2 million in respect of guaranteed trade receivables.
At the same time, total operating costs fell 7% to $40.7 million, but these cost savings were partially eroded by the recognition of a non-cash impairment charge of $1.2 million.
“It is heartening to note that the majority of our businesses posted topline growth in the third quarter,” says Tat Hong’s group CEO and managing director, Roland Ng.
In a Tuesday aftermarket release filed to the SGX, Ng also expresses his thanks to shareholders for their “strong support” of the group’s recently-concluded rights issue, which saw a subscription level of 155%.
“The total net proceeds raised of approximately $41.0 million has put the group in a stronger financial position and conferred to us greater financial flexibility which is crucial at this point in time given the many uncertainties in the global and regional markets,” comments Ng.
(See also: Tat Hong sinks in 2Q losses; proposes rights issue to raise $41 mil)
Shares of Tat Hong closed 2.63% higher at 39 cents on Tuesday.
