Business

corporate result: Pak Suzuki Motor’s profit rises 38% to Rs3.8 billion

Sales swell 47% to Rs29 billion in Q4, driven by volumetric growth

Our Correspondent March 20, 2018

Sales swell 47% to Rs29 billion in Q4, driven by volumetric growth PHOTO: PAK SUZUKI

KARACHI: Pak Suzuki Motor Company earned a profit of Rs3.825 billion in calendar year 2017, up 38% compared with Rs2.772 billion in the previous year, according to a company notice sent to the Pakistan Stock Exchange (PSX) on Monday.

Earnings per share (EPS) came in at Rs46.49 in 2017 compared with Rs33.69 in 2016. In the fourth quarter (Oct-Dec 2017), the company’s earnings stood at Rs726 million with EPS at Rs8.9, down 19% year-on-year. This was below expectations as its gross margins contracted, a Topline Securities’ report said.

Along with the result, the company announced a final cash dividend of Rs18.6 per share for the full year.

Pak Suzuki Motor’s stock price closed at Rs511.33, up 4%, at the PSX. Overall, the KSE 100-share Index ended at 43,539, up 176 points or 0.41%.

Sales of the company surged 47% year-on-year to Rs29 billion in the fourth quarter, driven by the volumetric growth that went up 34% year-on-year.

Sales of Suzuki WagonR remained the most impressive with volumes reaching 8,352 units in 4Q2017, up 100% year-on-year. It was followed by Mehran (up 31%) and Cultus (up 14%) whose sales were boosted by increasing demand from online ride-hailing services and sustained low financing rates. Although revenues were up 47%, gross profits rose 7% only as gross margins shrank 2.9 percentage points to 7.8% in 4Q2017.

Margins contracted due to higher prices of cold-rolled coil (CRC), a raw material, up 18% year-on-year. The company did not fully pass on the impact of higher raw material prices to the customers.

Higher crude oil prices, up 14% year-on-year, led to an increase in transport/distribution costs, which further dented profitability in the fourth quarter.

Furthermore, the growth of bottom line in 4Q2017 was hampered by the higher effective tax rate at 36% compared with 31% last year as the company took provisioning against higher tax due to lower dividend payout at 16% in 2016.

Published in The Express Tribune, March 20^th, 2018.

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