3 reasons to blame for Tat Hong's ugly performance in 1Q

'Worst showing,' says analyst.

According to CIMB, the latest set of results is by far TAT’s worst showing in two years. Loads of issues have surfaced though they are pretty much out of TAT’s hands.

"While we do not think that the company has become altogether bad overnight, it does need to repair certain leaks in the house," says CIMB.

Here's more:

The 1Q14 revenue drop of 18% yoy was a surprise. All divisions, except the tower crane rental segment, turned in lower revenue. Core profit plunged 65% yoy to S$7m, primarily due to margin pressure.

Overall gross margin also deteriorated 2.8% pts yoy to 37.6%, with lower margins recorded for the tower crane rental and distribution arms.

The culprits were (1) PT Worldwide Equipment in Indonesia, (2) crane relocation costs incurred in Australia for a new LNG project in Darwin, and (3) price competition and lower margins in Australia as the distribution divisionstrived to move aged inventory and discontinued models.

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