Proton posts warning signs after 3Q net loss of RM281m

Proton Holdings Bhd has warned of difficult operating conditions after announcing a net loss of RM281.46 million for its third quarter (3Q) to Dec 31, 2006 against a net profit of RM86.51 million a year ago. "The group's operating conditions will remain difficult due to the higher components costs, as experienced by the industry and margins will come under pressure from competition," it said. Announcing its financial performance for the 3Q, it said revenue fell 55% to RM962.27 million from RM2.15 billion in the previous corresponding period. The loss per share was 51.2 sen. For the nine-month period, the company's net loss jumped to RM590.45 million from the RM80.17 million in the previous corresponding period on a 39.2% drop in revenue to RM3.66 billion from RM6.01 billion previously. Proton said total industry volume for last year fell 11% from 2005 mainly due to sluggish secondary market conditions, stricter loan approvals, and higher fuel prices and interest rates. "In addition, intense competition and heavy promotion and discounting by other marques, as well as the slowdown towards the year-end have further dampened domestic sales volume. "As a result, the group registered a loss before tax of RM608.2 million for the current financial period compared to a loss before tax of RM72.9 million in the corresponding period last year. "Furthermore, provision for claims in respect of prior years’ project development costs, additional expenditure required for promotions, and the higher cost of raw materials have further impacted the profitability of the group," it added. Proton said it would continue to focus on improving quality, export growth, improving dealer management and implementing measures to mitigate the impact of a more liberalised automotive industry. The national carmaker said it also expected to introduce new models this year, which would result in improved sales.