SINGAPORE - Motor company Tan Chong International announced that net profit for the full year ended Dec 31 was HK$191 million (S$34.2 million), plunging 38 per cent from HK$308.2 million the preceding year.
Revenue for the full year was HK$16.7 billion, up 12.9 per cent from HK$14.8 billion in 2015.
This was principally derived from the growth of its motor vehicle distribution and retail operations in Singapore and Taiwan, as well as from its complete knocked-down business in Thailand and Malaysia.
But the strength of the Japanese yen negatively impacted cost of sales and consequently, reduced gross profit margins in a "challenging" year, the company said.
The yen appreciated 11 per cent on average against the operating currencies of the company's motor vehicle distribution and dealership business.
In Singapore, the Nissan and Subaru brands performed strongly in 2016, recording double-digit growth in unit sales and revenue. The new car registration cycle continued to drive growth in the passenger vehicle market, Tan Chong said.
It expects this year to be another challenging one, noting: "With heightened uncertainties from global geopolitical changes and a rising interest rates environment impacting consumer and business sentiment, the group remains cautious regarding the outlook for 2017."
The company said it will continue to focus on the long-term opportunities in developing the nascent complete knocked-down territories and building upon the market traction gained in the complete built-up markets.
It established a joint venture in February this year with Fuji Heavy Industries to commence Subaru vehicle production in Thailand.
"Production is scheduled to start in first half of 2019 and vehicles produced are expected to be more competitive because of our scale and the advantages offered by the huge parts supply base in Thailand," Tan Chong said. Earnings per share for 2016 was nine Hong Kong cents, down from 15 Hong Kong cents a year earlier.
The company will pay a final dividend of seven Hong Kong cents per share.