Malaysia’s Proton back in profit on higher sales

Malaysia’s Proton back in profit on higher sales
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First Published: Mon, May 26 2008. 11 54 PM IST
Updated: Mon, May 26 2008. 11 54 PM IST
Malaysia’s national car maker Proton Holdings Berhad said on Monday it plans to launch its first multipurpose vehicle early 2009 after reporting higher-than-expected fourth quarter profits, buoyed by higher sales and a large government grant.
The company’s net profit in the quarter through March surged to 236.4 million ringgit (Rs315.2 crore), up from 915,000 ringgit in the same period a year ago, the company said in a statement.
Revenue for the quarter rose 37% on-year to $537 million (Rs2,288 crore). It was the third straight quarterly profit, helping the firm post gains for the full year.
Proton posted a net profit of $63 million for the fiscal year that ended 31 March, rebounding from a loss the previous year. Revenue rose 14% to $1.75 billion.
Analysts had forecast the full-year result to be an average net loss of $16.6 million.
The better-than-expected results were largely supported by a $61 million research and development grant from the government, which the car maker recognized as income.
Earnings growth was also driven by one-off gains from sale of intellectual property rights for a vehicle platform in China, the launch of Persona and Saga cars with higher profit margins, and improved sales and cost reduction measures.
“We should be able to sustain (the profit growth). There are signs that we are out of the woods. We are improving,” its chief executive Syed Zainal Abidin Mohamed Tahir told reporters.
He said Proton plans to launch its first multipurpose vehicle in early 2009, which will open up new markets for the firm, and boost its export and market share. Multipurpose vehicles include larger vehicles like minivans. Proton has traditionally made only passenger cars.
Tahir said domestic sales improved in the fourth quarter, up nearly 12% from the previous quarter to 40,903 units, and expected to remain upward this year. The auto maker will intensify exports to China, India, South-East Asia and West Asia to double total sales to 300,000 units by 2010, he said.
The auto maker expects to spend $187 million in the next fiscal year on research and development, but will seek greater production efficiency and stricter improvement in quality to cope with rising cost of raw material, he said.
The Proton’s share of the domestic passenger car market slumped to 24% last year, from 60% in 2001, as more Malaysians bought imported vehicles. Despite stronger sales this year, analysts said Proton’s export prospects remain poor. With increasing competitive market, they said it will be tough for it to penetrate global markets without a strong foreign partner. “Proton is on the right path but it needs to get married because it cannot survive alone,” said Rosnani Rasul, auto analyst with MIMB Investment Bank Berhad.
As other global players begin developing modern hybrid cars, Proton risks being left behind, she warned.
Proton’s chairman Mohammed Azlan Hashim said the company remains open to foreign partnerships. “Proton is establishing itself as a mass market car producer...our approach is to have multiple partners. We are continuously keeping an eye out for possible collaborations,” he said, without giving details.
The government in November abandoned talks with Volkswagen AG and General Motors Corp. on strategic tie-ups to improve Proton’s fortunes.
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First Published: Mon, May 26 2008. 11 54 PM IST
More Topics: Malaysia | Proton | Auto Maker | Profit | Sales |