SINGAPORE (May 30): Tower crane manufacturer Yongmao Holdings posted a loss of RMB2.3 million ($0.5 million) for the quarter ended March, compared to earnings of RMB5.7 million in 4Q17, due to higher expenses and lower margins.

This brings the group’s earnings for FY18 to RMB20.6 million, down 26.7% from RMB28.1 million a year ago.

A first and final dividend of 1 cent per share has been declared for the financial year under review.

Revenue for 4Q grew 35.7% to RMB161.4 million from RMB119 million in 4Q17, due mainly from higher sales of tower cranes as rental and service income also grew compared to the previous year.

Gross profit, however, fell as average gross profit margin declined to 24.6% from 33.6% a year ago, amid keen price competition resulting in lower margins from the sales of towercranes, coupled with higher steel material costs.

Total operating expenses grew 22.9% on-year to RMB43.1 million in 4Q18, with higher distribution costs due to increased freight & transportation charges, as well as higher administrative expenses due to staff benefit costs and transportation costs incurred from the shifting of Yongmao’s Hong Kong office and warehouse.

Finance costs grew 16.5% to RMB3.7 million from RMB3.1 million a year ago due to higher average borrowing.

While Yongmao is positive on China’s continued economic growth over the year to date, the group says this may cool in coming months as its government cracks down on financial risks to result in higher borrowing costs for businesses.

It remains cautious on the infrastructure investment landscape in view of rising business costs, and believes demand for tower cranes in markets Singapore, Taiwan and Middle East are likely to see a better demand in the replacement markets – although markets like Macau remain challenging, in Yongmao’s view.

Shares in the group last traded at 35 cents.

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