Proton Holdings Bhd today announced a group pre-tax loss of RM338 million for its financial year ended March 31, 2009, from a pre-tax profit of RM144 million in 2008, mainly due to an exceptional impairment of property, plant and equipment (PPE) and inventory write-down.

Nadzmi Mohd Salleh

Proton’s chairman Datuk Mohd Nadzmi Mohd Salleh said the group’s performance was reflective of the current global economic conditions.

The softening of the automotive industry arising from the global financial crisis had also adversely affected the performance of the group in the second half of the financial year, he said.

“The main reason for the group’s loss was due to Proton’s decision for the impairment of PPE and inventory write-down for certain models impacted by volume contraction,” Nadzmi said.

“Additionally, the results for the second half of the financial year have also been adversely affected by the accelerated amortisation of certain dies and jigs as well as the increased costs of components and raw materials arising from higher foreign currency exchange rates, particularly the Japanese yen and US dollar,” he said.

Proton’s group total revenue, however, improved by RM864.98 million to RM6.49 billion in FY2008/09 compared to RM5.62 billion in FY2007/08.

The group sold a total of 156,845 units of cars in FY2008/9 compared to 139,942 units last year, Nadzmi said.

Focusing on the fourth-quarter results for the current financial year, he said Proton reported a group pre-tax loss of RM392 million compared to the pre-tax profit of RM172 million in the same quarter of the previous financial year (FY2007/08).

The substantial loss for the quarter was largely due to the exceptional impairment for PPE and inventory write-down relating to certain models impacted by volume contraction totalling RM360 million and, to a lesser extent, lower domestic sales volume.

The group total revenue for the fourth quarter was down by RM315.4 million to RM1.4 billion for the fourth quarter of FY2008/09 compared to RM1.7 billion posted during the same period in the preceding year.

This was due to lower units sold of 34,490 in the last quarter of FY2008/09 compared to 40,903 in the same period last year.

Nadzmi said the contraction in sales, had resulted in Proton reassessing its production volume in view of the current economic slowdown.

“The comprehensive assessment had resulted in Proton to taking an unprecedented step of impairing its assets and inventory specifically relating to certain models affected by the volume contraction amounting to RM360 million,” he said.

For this financial year, Proton is expected to receive a research and development grant from the government amounting to RM81 million, as provided by the National Automotive Policy (NAP).

Proton’s managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said that despite the loss, the group’s balance sheet remained healthy as its cash reserves stood at RM899.5 million, down from RM1.17 billion last year.

“As a fully fledged automotive company, we spent a substantial amount on the development of new models such as the Proton Exora and Lotus Evora during the year. While this had affected our cash reserves, we will be able to recover when the cars are sold,” Syed Zainal said.

As of today, bookings for the new Exora has already reached 11,000 units, he said.

“We are now planning to launch the MPV in the Indonesian market in July 2009, which has a sizeable middle class market and is predominantly an MPV market,” Syed Zainal said.

“Besides having a strategic partnership with Zagross Khodro for the CKD assembly of the Wira and more recently the Gen.2 models in Iran, we have also entered into a business relationship with Youngman of China for the CBU supply of our Gen.2 and Persona models, which are sold and distributed in China under Youngman’s Europestar badge, potentially leading to CKD assembly operations,” he said.

“We are also finalising our India strategy by the end of the year and we are indeed excited with these prospects in making Proton cars available and more visible in the overseas markets as this will hopefully enhance our revenue,” Syed Zainal said.

“In terms of volume, we are aiming at doubling our total sales volume by 2010, of which the bulk will be derived from the export markets,” he said.