Proton Has a Good Quarter

By Brendan Moore

11.29.2008

KUALA LUMPUR, Malaysia – Proton, the national auto manufacturer of Malayasia reported their second-quarter results a couple of days ago, and the company had some positive news.

Proton posted stronger sales, an increase in home-country market share and an increase in quarterly net profit.

State-owned Proton Holdings reported a net profit of 43.81 million ringgit (USD $12.10 million at an exchange rate of $1=3.620 Malaysian Ringgit) for the July to September quarter, compared to 3.51 million ringgit in the year-ago period. It is expected that Proton will come in at a net profit of 148.2 million ringgit or 25.48 sen per share for fiscal 2009, compared to 202.87 million ringgit or 36.9 sen a share rung up in the previous year.

Net profit was lower quarter-to-quarter as a result of higher spending for higher raw material and component cost, and increased overhead, company officials said. Proton spent more on manufacturing cars than it generated in revenue selling them in the three months to Sept. 30, it said in a statement to the stock exchange in Kuala Lumpur two days ago. In fact, most of the actual profit in this most recent quarter came from vehicle servicing revenue, not sales revenue.

“We are realistic that moving forward, the operating environment will be very challenging. Evidence of this can already be seen in the global automotive industry,” said Chairman Mohammed Azlan Hashim. “We will continue with our efforts to minimize costs and improve efficiency in our operations while investing for our future.”

Proton has made good progress in taking back some market share from rival Perodua, which makes only compact cars, after it launched several economy models earlier this year. It also made some incremental gains against Japanese import brands on Proton’s home turf.

Proton said its domestic and overseas sales rose to 44,677 units in the July-August quarter, up from 39,888 in the previous quarter, after it kicked off sales in several new foreign markets this year, most notably in the Middle East. It increased its domestic market share to 33 percent from 24 percent last year.

Azlan said the company, which finally returned to the positive side of the ledger in its fiscal year ended March this year, expects its “positive performance to continue” but would not be pinned down on whether or not it can maintain its profitability as the global economic recession curtails demand.

In spite of, or perhaps because of, the economic gloom permeating the auto sector, Proton still intends to launch their new seven-seater MPV in March of 2009. The company believes the new vehicle will satisfy unmet needs among their target customers and have high hopes for the new MPV. The MPV is a new development not just for Proton’s customers, but for Proton as well – the company has never made a vehicle larger than a five-seater.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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