Tan Chong posts 20% increase in FY18 earnings to $103.4 mil despite lower sales

SINGAPORE (Mar 27): Tan Chong International, the distributor and dealer of motor vehicles, saw a 19.7% in full-year earnings to HK$600.9 million ($103.4 million) in FY18 from HK$510.9 million in FY17.

FY18 revenue fell 1% to HK$15.7 billion from a year ago, mainly due to lower sales volume in its motor vehicle distribution and retail division.

In Singapore, the group experienced a 15% slowdown in revenue in 2018 as lower COE quota and stricter emission standards impacted its Nissan and Subaru businesses in Singapore.

On the back of escalation of emission regulations and competitive dynamics in the motor vehicle market, the group’s China business also recorded a decline in Subaru sales.

Despite the headwinds to its topline, the group achieved an improvement in its profit from operation, due in part to an increase in other net income and lower other operating expenses.

Profit from operations increased 2% to HK$971.75 million while operating profit margin improved to 6.2% from 6.0%.

Other net income increased 56% to HK$436 million from a year ago due to higher contribution from the group’s transportation business.

Administrative expenses increased to HK$1.16 billion from HK$1.06 billion in FY17 as number of employees in FY18 increased by 1.45% to 5,815 from 5,732 in FY17.

The group has declared a final dividend of 9.5 HK cents per share.

In its outlook, Tan Chong says it will continue to push forward with the ongoing cost reduction and productivity initiatives to achieve a leaner and competitive organisation that will serve it well in uncertain times.

"This has resulted in the strengthening of the Group’s financial stability, building towards a more cost-efficient platform for long-term sustainable growth," it adds.

Shares in Tan Chong closed at HK$2.42 on Wednesday.