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May 29, 2008

MALAYSIA: Proton turns to profit

Proton reported a sharp turnaround in earnings in the fourth quarter of the fiscal year ended 31 March, with net profits rising to RM236.4m compared with a loss of RM 589.5m a year earlier.

Proton reported a sharp turnaround in earnings in the fourth quarter of the fiscal year ended 31 March, with net profits rising to RM236.4m compared with a loss of RM 589.5m a year earlier.

The company cited improving sales, cost-cutting and an R&D grant from the government under the new national automotive policy, worth RM194m. It also said it had received RM32m from the sale of intellectual property to China’s Jinhua Youngman Automobile Manufacturing.

Proton ’s full-year earnings rose to RM 162.2m, compared with a loss of RM618.1m, while revenues rose 14% to RM5.6bn, compared with RM4.9bn.

Proton said it spent RM500m on R&D last year and will increase this to RM600m in the current fiscal year. And its financial performance is expected to continue to improve.

The automaker aims double sales by 2010 and sell 1m units worldwide by 2016 with a stronger strategy for overseas markets – particularly Asia, the Middle East and North Africa. Its partnership in China in particular will be central in achieving these targets.

The company said it would reduce the number of main platforms from three to two and core models from five to three by 2011 in order to streamline its operations and improve economies of scale.

For smaller-volume cars, Proton will seek alliances with other carmakers. Local content will also be increased.

The company hopes that a strengthened R&D programme, which will see the launch of a new MPV model next year, will help lift global sales.

Tony Pugliese

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