PETALING JAYA: Cycle & Carriage Bintang Bhd (CCB), which saw its privatisation plan fall through recently, incurred a net loss of RM22.25 million in the fourth quarter ended Dec 31, 2019 compared with a net profit of RM2.53 million a year ago, due to losses in its Mercedes-Benz operations and impairment loss on right-of-use assets.
Its revenue fell 6.9% to RM280.78 million from RM301.7 million in the previous year’s corresponding quarter.
For the full-year period, CCB posted a net loss of RM39.2 million against a net profit of RM20.35 million in 2018 due to declined sales volume and impairment loss of RM27 million on the Sungai Besi site.
Its revenue decreased 24.4% to RM1.14 billion from RM1.51 billion a year ago.
In 2019, unit sales were 29% lower and margins were reduced, due to a shift in sales mix to lower priced models and weak consumer demand, according to CCB’s filing with the stock exchange.
Its chairman Eric Chan said trading conditions will remain challenging in the year ahead.
“The compounding effect of the current Covid-19 virus on an already subdued economic environment, is expected to exacerbate the softening demand and pressure on margins in the automotive retailing segment of the premium luxury market. The group remains committed to its business improvement strategy.”
In a separate filing, CCB said it had entered into a conditional sale and purchase agreement with The Malayan Press (PG) Sdn Bhd to acquire three pieces of freehold vacant land in George Town, Penang with an area of 35,420 square feet in total, for RM24.21 million cash.
The group said it seeks to strengthen presence on Penang island by establishing a site that can accommodate at least a 2S (Service and Spare parts only) facility.
The total development cost is estimated to be RM27.4 million which may be partly financed through internally generated funds and/or bank borrowings. Construction is expected to commence in the fourth quarter of 2021 with completion by the fourth quarter of 2022.
CCB said the exercise is intended to expand its capacity in providing after-sales services as well as potentially body and paint services as its current facility in Georgetown is operating at a capacity maximised level.
The group also explained that its current facility is a leased premise on a heritage site and that it is subject to prevailing rental rates and future fluctuation of rental rates, which could have an effect on its cash flows and profitability.
