Proton Makes First Loss In 12 Months

[Mark H]

http://business.edp24.co.uk/story.aspx?bra...3A09%3A42%3A697

 

The parent company of Norfolk carmaker Lotus has admitted it needs to do better after running into the red and seeing its market share decline.

 

Malaysian firm Proton reported a loss of £1.8m for the three months to the end of June 30, its first loss in more than a year.

 

Its share of the Malaysian car market has been in steady decline as it faces competition from other producers, while its overseas sales have also been disappointing.

 

In July Proton chief executive Mahaleel Ariff left the group after failing to agree a new contract.

 

Proton's management said after the publication of the results it was embarking on a series of measures to improve its fortunes.

 

It said it was now looking to streamline its operating costs, develop a range of spin-off products from its existing model line-up and work to improve the quality of its cars.

 

Proton said steps had been taken to introduce greater financial discipline, enhance corporate governance and ensure investments were prudently managed.

 

A tightening of the purse strings is unlikely to affect Hethel-based Lotus in the short term, as it already has the funds to develop the new Europa and the replacement for the Esprit.

 

But it raises a question mark over whether Lotus will be given the finance to develop other models such as the new mid-range GT sports car, which it is hoping to launch by 2010.

 

Proton also revealed it had set aside £20m to cover loans to subsidiary companies such as Lotus and motorcycle manufacturer Agusta, which Proton said it was unlikely to recover.

 

Proton car sales were down more than 7pc in the first seven months of the year as the firm continued to struggle against competition from local rivals Perodua and foreign makes such as Toyota and Kia.

 

"Proton management believes the time has come to accept and clearly recognise the various adverse circum-stances affecting both the domestic and international automotive industry," said a Proton statement.

 

"Management has resolved to identify all areas of concern and intends to devise and introduce appropriate measures to address them.

 

"Difficult decisions have been made, and management will continue to monitor the progress of the group to appropriately address issues arising."

 

Proton's poor results and its depleted cash pile had also raised questions about its financial health. But the firm said it remained financially strong.

 

"The group is financially sound and has the resources, facilities and infrastructure to endure this current advers-ity," it said.

 

Proton has been talking to German carmaker VW about taking a major stake to help provide the finance needed to allow it to compete in world markets.

 

In July the Malaysian government's investment arm Khazanah Nasional, which owns 42.7pc of Proton, confirmed talks were being held on a proposed alliance with VW, but no deal has yet been signed.