KARACHI: Honda Atlas Cars announced on Tuesday that its net profit rose 12% to Rs3.6 billion in the year to March 2016 compared to earnings of Rs3.2 billion in the previous year, said a company notice sent to the Pakistan Stock Exchange (PSX).
Earnings per share of the carmaker jumped to Rs24.9 in financial year 2015-16 as opposed to Rs22.15 last year. Along with the result, the company declared a final cash dividend of Rs7 per share.
Honda Atlas announces Rs2.4 billion profit
Although the result was slightly above expectations, Honda Atlas stock closed 1.2% lower at Rs286 on the PSX. However, the benchmark KSE 100-share Index closed the day slightly up by 11 points or 0.03% at 36,137.
“The earnings are good and are close to market expectations. The focus of Honda Atlas Cars, customers as well as the market will be on the new model of Honda Civic as it will change market scenario for the company,” Sherman Securities analyst Sadiq Samin told The Express Tribune.
The first nine months (Apr-Dec) of financial year 2015-16 were comparatively much better as in that period the company notched up a net profit of Rs2.4 billion, up 53% from Rs1.6 billion in the same period of previous year.
The carmaker’s performance was even better in the third quarter (Oct-Dec) in which net earnings jumped 71% to Rs611 million against Rs358 million in the same quarter of 2014-15.
In 2015-16, revenues rose 6% to Rs40.1 billion despite a 10% pickup in car sales that reached 25,800 units. “We attribute the lower growth in revenues to higher Honda City sales as customers held off Civic purchase until the introduction of a new model,” a report of Taurus Securities said.
'No signs of Pakistan launch for 2016 Honda Civic this year'
Gross margins improved 2.4 percentage points to 15.1% on the back of a 31% decline in steel prices and 9.3% depreciation in Japanese yen and 7.7% in Thai baht against the US dollar. Other income of the company increased 41%.
However, the improved gross profit was neutralised by a higher effective tax rate of 31% compared to 16% in financial year 2014-15. Resultantly, net earnings stood at Rs3.6 billion, up 12%.
On a year-on-year basis, revenues in the fourth quarter dropped 2%, though car sales edged up 1%. The lower revenues could be explained by a shift in sales mix towards Honda City, which has a lower price tag compared to Civic, and declining sales of Honda Civic because of expected launch of a new model in the second half of 2016.
Gross margins, however, expanded by 3.1 percentage points on the back of a 26% year-on-year fall in cold-rolled coil (CRC) steel prices and 10% weakness in Thai baht against the dollar.
“Any unfavourable currency movement, regulatory changes that can allow import of used cars and delay in the launch of new Civic model are key risks for Honda Atlas Cars,” commented Topline Securities.
Published in The Express Tribune, May 18th, 2016.
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