9MFY14: Indus Motor records impressive profits

Earnings per share clock at Rs29.52.

KARACHI: Indus Motor Company (IMC) – the second largest carmaker in Pakistan with 26% market share – has posted a net profit of Rs2.32 billion or earnings per share (EPS) of Rs29.52 for the first nine months of the fiscal year 2014 (9MFY14), up 34.1% year-on-year (YoY) against a profit of Rs1.73 billion or EPS of Rs22.0 in the same period last year.

On a quarter-on-quarter (QoQ) basis, the earnings represented a 105% growth, clocking in at Rs12.32 per share. The gross margins rose to 8.8% (up 139 percentage points QoQ) pushed by the full realisation of the price increase from last year and the marginal impact of Pakistan rupee appreciation against the US dollar and the Japanese yen.

Analysts say the results were better than market expectations. Moreover, a 32% QoQ jump in other income supported the bottom-line.

On volumetric front, QoQ sales were 71.8% higher with 11,548 units compared to 6,760 units in second quarter of FY14 (2QFY14). In 9MFY14, volumes settled at 26,727 units, up 3.8%.

In the near future, the impact of average QoQ rupee appreciation of 3.2% and 5.45% against the dollar and the yen respectively in third quarter of FY13 (3QFY14) would further expand margins, BMA Research said.

However, the price cuts by the company in March 2014 would partially offset the positives, the report added.

Earnings of the IMC declined by a significant 23% in fiscal year 2013 but managed to beat market estimates. The carmaker reported a profit of Rs3.35 billion in fiscal 2013 compared to Rs4.30 billion it earned in fiscal 2012.

Established in 1992, IMC is a joint venture of the House of Habib, Toyota Motor Corporation and Toyota Tsusho Corporation.

Published in The Express Tribune, April 19^th, 2014.

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