Lotus Group owner Proton this morning said cash spent on a major branding campaign and restructuring of the British engineer and car maker added to a halving of its profits.

The Malaysian car maker said pre-tax profit dropped to RM134 million (about �27m) in the first nine months of its 2010/11 financial year, down from RM248 million (�55.5m) in the same period last year.

Proton Holdings said the decline was largely due to higher costs, including branding and research and development spending.

However, it also said the results included restructuring costs as part of Lotus's business transformation plan.

Proton said: 'Part of the board-approved Lotus' business transformation plan entails a major branding exercise at various international motor shows and a restructuring exercise which includes investment on new product development, management reorganization and rationalization of its dealer network.'

However, Proton's group chairman Dato' Sri Mohd Nadzmi said the firm's strategy was still built on 'offering the right car, at the right price for the right market segment, would enable it to continue to capitalize on growing domestic sales'.

At the Group level, the firm said higher marketing and selling costs, in addition to lower domestic sales volume experienced as competitors aggressively lowered prices during the seasonal and traditionally slower year-end demand, were primary contributors to losses in quarter three compared to the profit recorded in the immediate preceding quarter.

However, it said performance in the final quarter of the 2010/11 financial year was expected to put the company back on its growth trajectory.

Proton sold a total of 157,274 vehicles in 2010, with 15,805 sold in January this year. It said its domestic car market grew 13% in 2010.