Indus Motor's profit falls 20% despite higher net sales

Earnings stand at Rs3.4 billion in Jan-Mar 2019 quarter

KARACHI: Despite a rise in net sales, Indus Motor Company's (IMC) profit fell 21% to Rs3.4 billion in the quarter ended March 31, 2019, according to a notification sent to the Pakistan Stock Exchange (PSX) on Friday.

The company posted a net profit of Rs4.3 billion in the same period last year.

Its earnings per share (EPS) fell from Rs54.35 in Jan-Mar last year to Rs42.56 in Jan-Mar 2019.

Net sales of IMC came in at Rs41.5 billion in Jan-Mar 2019 against Rs36.7 billion in the same period of 2018, displaying a hike of 13%.

"If this quarter is to be compared with the previous quarter which ended on December 31, 2018, net sales of the company remained stagnant," said JS Research analyst Ahmed Lakhani in comments to The Express Tribune. "However, on a year-on-year basis, sales swelled 13%."

"Mainly, gross margins of the company shrank," he continued. "The margins were 17.5% during the same quarter of last year, which dropped to 12.2% in the quarter ended December 31, 2018 and now, they have declined further to 11.7% in the quarter under review."



He added that the company was unable to fully pass on the impact of rupee depreciation to its customers. IMC's earnings were in line with expectations of the research house, the analyst pointed out.

Cost of sales of the automaker widened to Rs37 billion against Rs30 billion last year. Gross profit declined 23% to Rs4.9 billion against Rs6.3 billion on a year-on-year basis.

Nine-month result

In nine months ended March 31, 2019, the automaker posted a net profit of Rs10.3 billion, down 11% compared to Rs11.6 billion in the same period of previous fiscal year.

EPS of the company was recorded at Rs130.50 in Jul-Mar FY19 as opposed to Rs148.04 in the same period of previous year.

Net sales rose to Rs118 billion in first nine months of FY19 against Rs100 billion in the corresponding period of previous year, a rise of 18%.

Cost of sales jumped to Rs103 billion against Rs83 billion, an increase of 24.75%. Gross profit contracted to Rs15 billion against Rs17 billion in 2018.