Pak Suzuki Motor Co’s profit drops 41% in H1

Earnings fall on the back of end of Punjab govt’s cab scheme

KARACHI: Pak Suzuki Motor Company’s profit declined 41% to Rs1.43 billion in the half year ended June 30 due to a decrease in volumetric sales amid the end of the Punjab government’s taxi scheme.

“Sales during the first half of 2016 declined by 3% (in rupee terms) year-on-year due to decline in volumes by 9.3%, due solely to the completion of the cab scheme in Jan-Feb 2016, which resulted in Bolan and Ravi sales dipping by 37% and 34% respectively,” Ahmed Lakhani, an analyst at JS Global, said in a post-result comment.

“Due to changing product mix towards higher-priced cars, the overall decline in net revenues was less than the decline in volumes,” he added.



Hamza Raza, an analyst at Topline Securities, added excluding the taxi units (Ravi and Bolan), sales were robust as they increased 17% year-on-year to 34,864 units in the six months under review.

Analysts termed the financial result below market expectations. Share price of the Japanese car assembler fell by the maximum limit of 5% in a day, or Rs21.78, and closed at Rs413.99 on a turnover of 617,900 shares at the Pakistan Stock Exchange.

Raza added that gross margins of the company fell by over 2.5% during the first half due to the appreciating Japanese yen against the US dollar, coupled with increasing steel prices. The company also booked super tax in the April-June quarter, resulting in an effective tax rate of 42% for the period under review.

The company said in a notification to the stock exchange it earned Rs2.42 billion in the corresponding period of 2015. Accordingly, the earnings per share dropped to Rs17.44 for the period under review from Rs29.41 in the corresponding period.

Cost of sales remained flat at Rs35 billion. Finance cost rose to Rs84.42 million from Rs23.85 million while other operating income increased to Rs589.93 million from Rs427.36 million.

In the April-June quarter alone, the company’s profit dropped 67% to Rs487.84 million from Rs1.47 billion in the corresponding period last year.

Published in The Express Tribune, July 29^th, 2016.

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