Friday 29 Mar 2024
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KUALA LUMPUR (April 23): Cycle & Carriage Bintang Bhd's financial year 2018 has started with its first quarter (1QFY18) ended March 31 in the red, as the group continues to see its margin hurt by a demand shift to lower-priced models.

It recorded a net loss of RM2.7 million in 1QFY18, compared with a net profit of RM312,000 a year ago, as "margins remain highly compressed as a result of demand shifting to the lower-priced models", the group said in a Bursa Malaysia filing today.

The lower earnings came despite a 10% year-on-year rise in group revenue to RM388.58 million from RM352.73 million, as vehicle unit sales grew 21%, with the sales mix moving from S-Class to C, GLC and E-Classes.

It is worth noting that the higher revenue was in line with Mercedes-Benz Malaysia's (MBM's) best-ever first quarter sales, which registered a 13.2% year-on-year (y-o-y) sales growth to 3,335 vehicles.

Cycle & Carriage chairman Haslam Preeston said the group's Mercedes-Benz trading operations produced a net loss of RM2.7 million, compared with a profit of about RM300,000 in the equivalent period in 2017.

“The group incurred higher operating expenses, partly offset by recognition of RM900,000 insurance compensation relating to 2017 floods and financing costs, as investments were made toward upgrading network facilities, employee training and enterprise systems, in order to enhance customer service and improve operational efficiencies. The group’s after-sales division continued to perform satisfactorily,” Preeston added.

He also noted that operations have commenced at the dedicated commercial vehicle facility in Gopeng, Perak, in January, and that the renovation of its Glenmarie Autohaus to expand workbay capacity was completed in end-March.

Moving forward, Preeston expects markets to remain challenging for the rest of the year, although the group has benefited from a slight improvement in trading conditions in the first quarter.

At market close, Cycle & Carriage’s share price was unchanged at RM1.99, with about 1,800 shares traded, giving it a market capitalisation of RM200.5 million.

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