Proton weighs on DRB-Hicom, RM991m net loss in FY16

Proton to develop six versions of engines from 1.0 litres to 1.5 litres

KUALA LUMPUR: DRB-Hicom Bhd posted net losses of RM991.90mil in the financial year ended March 31, 2016, mainly due to the poor performance of Proton, which was a stark contrast for the diversified group with the earnings of RM300.19mil a year ago.

The group announced on Tuesday its revenue fell 11% to RM12.17bil from RM13.68bil a year ago. 

It incurred a pre-tax loss of RM821.27mil compared with a pre-tax profit of RM501.83mil a year ago.

“The losses were attributed largely to the poor performance of Proton’s group with lower sales of motor vehicles amidst stiff competition, volatility in foreign exchange rates and weak consumer sentiment. 

“The weak foreign exchange affected Proton's raw material cost, the lack of new models during the financial period and reduced profit margins. In addition, Proton made provisions relating to certain non-recurring charges which had affected its bottom-line,” it said. 

DRB-Hicom said if Proton's results were excluded, the group’s performance in FY16 was commendable.

For the fourth quarter ended March 31, 2016, DRB-Hicom posted net losses of RM790.76mil compared with earnings of RM89.79mil a year ago. 

Its revenue fell 17.9% to RM2.63bil from RM3.21bil. Loss per share was 40.90 sen compared with earnings per share of 4.64 sen. It recommended a dividend of two sen per share.

DRB-Hicom said it expected the outlook to remain challenging given the tough operating environment, but it “remains confident in a turnaround of Proton”.

It started on a strategic turnaround plan for Proton, working with the government including Ministry of Finance, Economic Planning Unit and Ministry of International Trade and Industry. 

It pointed out the Turnaround Plan involved a RM1.5bil soft loan from the government to help it turnaround its fortunes and expand the carmaker's domestic and international markets. 

“Proton is scheduled to roll out several new models in the coming months ahead including the new Perdana, Persona and the popular Saga. It will also be introducing a new model in collaboration with Suzuki by the end of this year,” it said. 

DRB-Hicom said aside from Proton, its unit Alam Flora’s solid waste management recorded increasing demand for its public cleansing services while Honda Malaysia reported record-breaking sales.

Another subsidiary, Composites Technology Research Malaysia (CTRM) reported an order book of RM12bil. New contracts signed or extended during the financial period included those with MD Helicopters US, Spirit AeroSystems Inc. and UTC Aerospace Systems.