Atlas Honda’s profit speeds up 25% to Rs3.75b

Better security, rising incomes boost demand

KARACHI: Atlas Honda Limited - the largest motorcycle manufacturer in Pakistan - earned a net profit of Rs3.75 billion in the year ended March 31, up 25% from Rs3 billion in the previous year, according to a company notice sent to the Pakistan Stock Exchange (PSX).

Earnings per share (EPS) increased to Rs36.29 in FY17 from Rs29.03 last year.

Atlas Honda’s share price closed at Rs590.25, down 1.26%. Overall, the KSE 100-share Index closed at 49,300, down 180 points or 0.37%.

Atlas Honda is a joint venture between the Atlas Group - a local financial and industrial conglomerate - and Honda Motor Company Japan.

Honda operates through two joint ventures in the Pakistani automobile market, both with the Atlas Group. It owns a 51% stake in Honda Atlas Cars (a sedan manufacturer) and a 35% stake in Atlas Honda (the motorcycle manufacturer).

Atlas Honda has its main plant in Karachi and another plant in Sheikhupura, Punjab. In fiscal year 2015-16, the company sold 807,669 units.

Industry officials say the motorcycle industry has been showing steady growth over the last one decade, particularly in the last couple of years.

The two-wheeler industry posted double-digit growth. Improving macroeconomic fundamentals, better security situation and increasing real incomes reflected in the rising demand for consumer durables, including two-wheelers. A strong consumer appetite for motorcycles in urban areas remained the major growth driver, according to Atlas Honda’s Annual Report for 2016.

This was due to softer fuel prices, increasing urbanisation and demographic shift towards youth.

However, lower farmer income continues to restrain new ownership of two-wheelers in rural homes. The recent increase in customs duty on imports and imposition of regulatory duty on raw material has increased cost pressures on all manufacturers, it added.

Annual production of motorcycles in Pakistan has crossed 2 million units and it still has the potential to grow sharply because of strong demand in the local market.

Published in The Express Tribune, April 29^th, 2017.

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