KUALA LUMPUR (May 24): Tan Chong Motor Holdings Bhd posted a lower net loss of RM5.07 million for the first quarter ended March 31, 2023 (1QFY2023), against RM19.52 million a year ago, on the back of higher contribution from its automotive division due to a favourable sales mix and lower operating expenses which resulted in better margins.

The group pointed to a one-off legal compensation of RM17.1 million charged out in the same period the preceding year.

Revenue for the quarter dropped 19.42% to RM619.89 million from RM769.3 million a year before, largely due to prolonged supply chain disruptions and stiffer competition in the local and overseas markets during the festive seasons faced by its automotive division.

The group declared an interim single tier dividend of one sen per share compared with 1.5 sen per share paid in the same period last year, to be paid on June 30, 2023.

The group’s automotive division’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose 162.1% to RM42.8 million in 1QFY2023 from RM16.34 million a year ago due to a favourable sales mix and lower operating expenses. This was despite the division registering lower revenue of RM599.1 million from RM749.69 million.

Its financial services division posted a lower EBITDA of RM6.7 million, compared with RM8.35 million a year before, due to a reversal of impairment loss on hire purchase receivables recognised last year and higher operating expenses recognised in the current quarter under review. The segment’s revenue was higher at RM17.4 million versus RM16.92 million last year.

Other operations also posted lower EBITDA of RM1.7 million from RM11.19 million a year before, due to lower net foreign exchange gain, and its revenue was higher at RM3.4 million from RM2.69 million before.

On its prospects, Tan Chong said the high interest rate environment and prolonged supply chain disruptions are expected to stifle automobile sales growth and dampen consumer demand.

Nevertheless, the group said it will continue to take active measures to rejuvenate the product line-up and raise its customer service level to position itself to compete well in the market.

Shares in Tan Chong closed unchanged at RM1.06, giving the group a market capitalisation of RM712 million.