Pak Suzuki Motor records loss of Rs1.16b

Loss comes on back of massive dip in auto sales

KARACHI: Pak Suzuki Motor Company recorded a loss of Rs1.16 billion in the quarter ended September 30, 2019 which came on the back of a massive reduction in auto sales.

The company had posted a profit of Rs94.8 million in the same period of previous year, according to a notice sent to the Pakistan Stock Exchange (PSX) on Friday.

Loss per share stood at Rs14.11 in the Jul-Sept 2019 quarter compared to earnings per share of Rs1.15 in the same period of previous year.

The results were largely in line with market expectations given the deplorable state of the auto sector.

"As was expected by most in the market, Pak Suzuki Motor Company registered its fourth quarterly loss in a row," said Shajar Research in a report.

Pak Suzuki recorded a gross loss of Rs232.1 million in the quarter under review compared to gross profit of Rs1.69 billion in the previous year.



"The decline came on account of currency depreciation of 21% year-on-year, which eroded margins as the company was unable to pass on the impact of adverse currency movement, higher duties on imported raw material and due to change in sales mix from high-margin cars to low-margin cars," stated an AHL Research report.

Meanwhile, distribution expenses dropped 26.5% to Rs461.2 million from Rs627.7 million in the previous year, in line with a drop in volumes. The introduction of new federal excise duty slabs for the auto sector and weak rupee, coupled with a slowdown in economic activities, have led to a massive decline in auto sales.

"Overall auto sales recorded a decline of 67% year-on-year in Jul-Sept 2019," the Shajar Research report added.

Finance cost of the company surged exponentially, jumping 12 times to Rs383.8 million from Rs32.3 million on account of increased borrowing by the company to meet working capital requirement.

Despite the hike in prices to adjust the impact of rupee depreciation, the company's topline registered a decline due to dip in car sales.

On the other hand, other income dropped 44.6% to Rs49.8 million in the quarter under review, from Rs89.9 million in the previous year.

"Other income dipped on account of reduction in bank balances and advances from customers," according to the AHL Research report.

Pak Suzuki's share price dipped Rs2.54 or 1.66% to Rs150.26 with a turnover of 172,000 shares.

The benchmark KSE 100-share Index recorded a decrease of 105.02 points, or 0.31%, to settle at 33,657.46.

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Nine-month earnings

Pak Suzuki recorded a loss of Rs2.69 billion in nine months ended September 30, 2019 on the back of a massive reduction in auto sales.

The company had posted a profit of Rs1.39 billion in the same period of previous year.

Loss per share stood at Rs32.64 in the period under review compared to earnings per share of Rs16.92 in the previous year.

Published in The Express Tribune, October 26^th, 2019.

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