This article first appeared in The Edge Financial Daily, on May 11, 2016.

KUALA LUMPUR: Tan Chong Motor Holdings Bhd, which distributes Nissan vehicles in Malaysia, slipped to a net loss of RM37.21 million or 5.7 sen loss per share for the first quarter ended March 31, 2016 (1QFY16), compared to a net profit of RM26.35 million or 4.04 sen per share a year ago, amid intense competition and a weak ringgit. 

Revenue fell 6.6% to RM1.47 billion from RM1.57 billion in 1QFY15, due to lower growth across all its operating divisions.

In a filing with Bursa Malaysia yesterday, Tan Chong Motor said the challenging business environment marked by intense competition, coupled with significant currency headwinds faced by the ringgit, had impacted its bottom line.

The group’s automotive division recorded a lower revenue of RM1.45 billion, down 6.6% year-on-year, due to the overall slower consumer demand and consequently lower earnings before interest, taxes, depreciation and amortisation as a result of higher completely knocked-down kits cost arising from unfavourable foreign-exchange rates compared with 1QFY15.

In view of volatility in the domestic and global economic situations, Tan Chong Motor expects the domestic auto sector will remain challenging as consumers’ confidence remains weak.

“It is therefore more important than ever for us to remain disciplined and focused on key priorities going forward. Our aim is to be cash-generative and to deliver profitable growth through the economic cycle,” it said.

On April 1, Tan Chong Motor raised its selling prices by 2.8% to 6.7% for certain Nissan models due to the weak ringgit, which impacted its operating costs.

“Domestically, the group will focus on sales and marketing activities, together with value offerings, to enhance sales efforts and to improve our competitiveness.

“Regionally, we continue to strengthen our footprint in Vietnam and other Indo-China countries by expanding our sales network and filling existing plant capacity with new models,” it added. 

Tan Chong shares closed unchanged at RM2.20 yesterday, bringing a market capitalisation of RM1.44 billion.