Corporate results: Indus Motor manages to restrict profit decline to 3%

Earns Rs3.5b, declares cash dividend of Rs32.50 for Jul-Sept quarter

KARACHI: As passenger car prices continued to rise following multiple massive rupee depreciations, Indus Motor’s profit fell 3% to Rs3.5 billion in the July-September 2018 quarter.

The automaker had registered earnings of Rs3.6 billion in the same period last year.

Earnings per share (EPS) dropped from Rs46.17 in Jul-Sept last year to Rs44.63 this year. The company announced a cash dividend of Rs32.50 for the quarter.

According to Taurus Research, the company’s sales volume grew 12%, but it was still lower than expectations, while cost increased a considerable 16%. Subsequently, its gross profit fell 7%.

On a quarter-on-quarter basis, sales fell 13% while cost decreased 10%, which pushed the gross profit down by 26%.

Volumes of Hilux and Fortuner models fell 20.3% and 58.1% respectively while Corolla volumes grew slightly. Meanwhile, the continued rupee depreciation impacted the margins negatively.



Gross margins for the Jul-Sept 2018 quarter went down to 14.46% compared to 17.43% in the previous quarter primarily due to the rupee depreciation. However, the company, which manufactures and assembles Toyota cars in Pakistan, managed to keep its gross margins at a level that was better than market expectations. The market had projected a steep decline in the margins considering the impact of massive rupee depreciation on the dollar-sensitive industry.

“Although gross margins fell, they were still better than what we were expecting considering the impact of rupee’s fall, which has affected other auto players more,” Topline Securities’ research analyst Daniyal Adil told The Express Tribune.

Adil said although the rupee had gone down nearly 28% since December last year, still the company was able to maintain its gross margins until the earlier quarters. The impact was seen in the outgoing quarter. “The company contained the growth in administrative expenses to just 4%, much lower than the growth in revenue while the growth in distribution expenses was restricted to 3%,” he said. “Other income rose 23% due to the benefit of rising interest rates through investments.”

Published in The Express Tribune, October 27^th, 2018.

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