SINGAPORE (Mar 27): Tan Chong International, the local distributor of Subaru cars via subsidiary The Motor Image Group, ended FY17 with earnings of HK$501.9 million ($83.7 million), more than double its FY16 earnings of HK$191.1 million on improved operating margins.

The improved bottom line comes despite a 5.3% decline in full-year revenue to HK$15.9 billion from HK$16.7 billion a year ago, which was primarily due to a sales volume decline from the motor vehicle distribution and retail division, as well as a slowdown in Singapore and China.

In Singapore, the group experienced a slowdown in sales due to a contraction in passenger vehicle volume, impacted by shifting COE cycles and stricter Euro 6 emission standards. The decline in sales in China came on the back of escalation of emission regulations and the competitive dynamics in the motor vehicle market, resulting in a decline in Subaru sales over the year.

The group nonetheless says its business of transportation and logistics, represented by Zero in Japan, continued to provide a diversified base of recurring revenue.

Additionally, healthy growth was observed in Taiwan and Philippines, two of Tan Chong’s core completely built-up (CBU) vehicle markets, as well as a more stable Japanese yen in comparison to FY16 against the operating currencies of its business.

In line with the lower revenue, cost of sales fell to HK$12.7 billion from HK$13.9 billion a year ago.

Operating profit margin nonetheless improved to 6% from 4.1% in FY16, which saw profit from operations increase on-year by 38% to HK$952 million.

Tan Chong attributes its bottomline growth to ongoing cost reduction and productivity initiatives to create a more lean and competitive organisation which has in turn led to a strengthening of the company’s financial stability, and furthered its efforts towards building a more cost-efficient platform for long-term growth.

The group says it remains cautiously optimistic on the outlook for 2018, and says it will continue to be prudent and vigilant as it intends to focus on value-added activities and opportunities; continue investing in the development of its motor and commercial vehicle business; and pursue programs and initiatives to further streamline its operations and eliminate unnecessary costs.

A final dividend of 8.5 HK cents per share has been recommended by the board.

It will be payable on 21 June upon approval at the AGM to be held on 28 May.

Shares in Tan Chong closed flat at HK$2.75 on Monday.