Suzuki profits jumped six-folds to Rs589 million during January to March 2012, marking its highest quarterly earnings in five years.
With recession fading away and business environment picking up, the company’s gross margin improved by 2.49 percentage points to stand at 5.2% compared with 2.7% in the same period last year as increase in the unit prices more than compensated for cost pressure, said Global Securities analyst Sarfaraz Abid.
The phenomenal result drove the company’s stock price to its upper limit of 5% to Rs83.19 during trade at the Karachi Stock Exchange.
Net sales went up by 49% with demand of cars rising amid Punjab Taxi scheme that aimed to deliver 20,000 cabs to successful applicants. Cost pressures were stable as steel prices went down by 7% while the rupee depreciated by 10% against the Japanese yen.
Volumetric sales went up by 31% increase in volumes to 30,642 units while average prices went up by 13% on a yearly basis during the period under review.
Despite business and paper work going up, administrative expense declined by 19% to Rs193 million against Rs162 million in the same period a year ago.
Moreover, other income declined by 4% to Rs126.7 million due to lower advances from customers.
In addition, improved profitability is also on account of relief in effective tax rate. Tax rate stood at 25% in the quarter against 59% in the same period last year.
Published in The Express Tribune, April 27th, 2012.
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