Proton Holdings Bhd faces improvement of financial state

Malaysian national carmaker Proton Holdings Berhad announced growth of its fourth-quarter profit to 236.4 million ringgit ($73 million), or 43 sen a share, from 915,000 ringgit, or 0.2 sen, a year earlier.

The increase resulted from research and development grant the company received from a government fund to help make new models.

The funding is buoy for Proton after dropping a planned partnership with Volkswagen in November. Proton announced that talks regarding any partnership with Volkswagen had ended with immediate effect, citing improving sales over the year, a favorable export outlook and confidence in management turning around the company without external collaboration. This unexpected announcement resulted in a 19% overnight drop in Proton's share price to their lowest value in seven years, due to the market's perceived uncertainty about the future financial viability of the company in an increasingly competitive local and world market.

The current improvement in financial state also happened thanks to higher-than-expected demand for the new Persona and Saga sedans.

The company plans to sell 50,000 to 60,000 Sagas a year. The new Proton Saga replacement model (codename Proton BLM) was launched on 18th January 2008. The new Saga is based on the Savvy platform, but using Campro 1.3L instead of Renault engine.

The company plans to double total sales to 300,000 vehicles by 2010.

The shares of Proton rose 10 sen, or 2.8 percent, to 3.74 ringgit at the 5 p.m. close on the Kuala Lumpur stock exchange.