Honda Atlas Cars’ quarterly profit dips 50%

Earnings fall despite 13% rise in vehicle sales

KARACHI: Honda Atlas Cars (HCAR) has reported a 50% drop in profit for the quarter ended June 2018 with earnings per share of Rs7.4 compared to Rs14.6 in the same quarter of previous year.

The decline in profits came despite a 13% increase in sales revenue in the April-June quarter because the company hiked car prices three times since December 2017.



The company also reported 13% increase in sales volume, led by Civic and City car models with 21% growth. However, BR-V sales dipped 19%. Honda reported after-tax profit of Rs1.1 billion for the quarter in line with market expectations.

“Cost of sales outpaced the growth in net sales, rising 20%. It resulted in lower margins, marking a decline of 5.2 percentage points to 9%,” Topline Securities’ research analyst Daniyal Adil told The Express Tribune.



“The decline in gross margins is due to increase in raw material cost and rupee depreciation,” he added. “The company’s other expenses have shot up 37%, which we believe is primarily due to exchange losses.”

Adil said the company had been unable to completely pass on the impact of increase in raw material prices like steel and rupee depreciation to buyers despite increasing prices on three occasions in seven months. The profitability had also been eroded by an effective tax rate of 44% as super tax was also booked by the company during the quarter, he said.



According to a report of Taurus Securities, Honda’s profit fell 24% during the April-June quarter on sequential basis due to a 7% fall in sales revenue. The company sold 12% less cars compared to the previous quarter.

Published in The Express Tribune, July 31^st, 2018.

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