KARACHI: Honda Atlas’s losses rose to Rs852 million for the year ended March 31 against Rs402 million in the same period last year.
“An increase in the cost of production has doubled the losses of the company,” said an InvestCap analyst. “Yen appreciation against the rupee has hit the company hard as most of the car components come from Japan,” said Abdul Azeem, automobile research analyst at InvestCap. Net sales of Honda Atlas Cars (Pakistan) Limited increased to Rs15.9 billion against Rs14.1 billion last year but were overshadowed by the hike in finance and sales cost of the company.
“More working capital was required by the company this year which increased the finance cost,” added the analyst. Finance cost of the company jumped 104 per cent to Rs455 million against Rs223 million recorded last year. Cost of sales increased 15 per cent to Rs16.1 billion this year against Rs14 billion in the same period last year. Losses per share increased from Rs2.81 to Rs5.97. Honda Civic and Honda City sales increased 15 per cent and 13 per cent respectively year-onyear, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).
However, on a monthly basis sales of Civic registered a decline of 15 per cent to 441 units in April compared to 520 units sold in March while City’s sales remained unchanged at 631 units in April, data showed. Honda increased the price by Rs20,000-35,000 recently but all the rise in production cost was not passed to the customers. “If the prices of Civic and City are increased any further, customers will likely go for Toyota Corolla,” said the analyst.
Honda’s main rivals Indus Motor Company, makers of Toyota Corolla, announced an increase of 284 per cent in net profit to Rs2.2 billion earlier this month for the first nine months of fiscal year 2010. Atlas Honda Cars (Pakistan) Limited is a joint venture between Honda Motor Company Limited, Japan and the Atlas Group of Companies, Pakistan.
Published in the Express Tribune, May 13th, 2010.