Malaysia’s first national carmaker, Proton Holdings, reported a sharp deterioration in its financial results for the quarter ending on 31 December, 2011.
The company reported a net loss of MYR88.2m (US$26m) for the quarter, compared with a MYR60.1m loss a year earlier. Revenue was down sharply, by 22% to MYR1.43bn – from MYR1.83bn.
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Datuk Seri Mohd Nadzmi Mohd Salleh, Proton group chairman, said the lower profits were mainly due to falling volumes and a poorer product mix in its domestic market. Lower volumes and ongoing restructuring costs at its struggling Lotus Group subsidiary also had a significant impact on its bottom-line performance.
In the nine months ending 31 December 2011, the group reported a net loss of MYR68.1m, compared with a MYR90.5m net profit previously. Revenue declined by 6.8% to MYR5.93bn
DRB-Hicom Bhd, which is soon expected to complete the acquisition of Khazanah Nasional’s 42.7% stake in Proton, faces an uphill battle to turn the company around with competition increasing at home and in key overseas markets. The acquisition also has generated significant uncertainty with regard to post takeover group strategy.
Proton’s existing management is currently finalising plans to export left hand drive vehicles from China to some overseas markets, including to Iran where it recently established Proton Iran.
The company is looking to re-enter the Turkish market after it began talks with a Turkish company regarding local assembly.
But negotiations with suppliers have reportedly been delayed and ongoing collaboration talks with Mitsubishi Motors have also been put on hold until all takeover formalities are completed. Some management changes are also expected.
There has been speculation in Malaysia as to whether DRB-Hicom will continue to support the current restructuring and expansion of Lotus Group, given the burden this is having on Proton’s finances.
Lotus is reported in Malaysia to be in technical breach of some post-drawdown covenants on long-term loans, mainly due to a delay in the execution of a management shares subscription and a joint venture agreement on product development.
