Costs turn Proton to a negative

Proton Holdings, Malaysia's biggest carmaker, reported its first loss in six quarters, citing surging component costs and higher provisions for doubtful debt.

The net loss was 12.4 million ringgit ($4.8 million), or 2.2 sen a share, in the three months ended June, compared with last year's profit of 166.5 million ringgit, or 30.3 sen a share, the company said yesterday.

Sales rose 6.8 per cent to 2.05 billion ringgit in the quarter.

Proton made a 91 million ringgit allowance for debt that it said may not be recovered, without giving comparable numbers from last year or details.

State-controlled Proton, which is seeking to develop cars with Volkswagen this year, is struggling to introduce new models to keep pace with offerings from Toyota, Honda and South Korea's Kia Motors.

Competition in Malaysia's car market intensified after the Government slashed import duties on vehicles made in countries of the Association of Southeast Asian Nations last year to meet its commitments under a free-trade agreement.

Proton's share of the region's biggest passenger car market fell from 66 per cent in 1999 to 44 per cent last year because of competition with overseas vehicles.

In June, Proton began selling its first new model in 16 months, the 1.2-litre Savvy, part of a plan to introduce three new models this year.

- BLOOMBERG