Indus Motor’s profit drops 62.4% to Rs1.32 billion
Declining volumes drag earnings down; board announces dividend of Rs7 per share
Toyota Corolla. PHOTO: REUTERS
KARACHI:
In line with expectations, Indus Motor Company’s profit took a hit as earnings declined 62.4% to Rs1.32 billion in the quarter ended September 30, 2019 owing to deteriorating volumes.
The company had posted a profit of Rs3.51 billion in the same period of previous year, according to a notice sent to the Pakistan Stock Exchange (PSX) on Tuesday.
Earnings per share stood at Rs16.78 in the quarter under review compared to Rs44.63 in the corresponding period of previous year.
The board of directors announced an interim cash dividend of Rs7 per share for the quarter. Net sales dropped 41% to Rs20.7 billion in the Jul-Sept 2019 quarter from Rs34.9 billion in the same quarter of previous year, which was expected due to a plunge in volumes. The decline in topline came despite an increase in prices of all variants as car sales continued to decline.
“Volumetric sales are down 57% year-on-year due to higher car prices, new FED charges imposed in the FY20 budget, higher interest rate for auto financing and economic slowdown,” said Topline Securities’ analyst Hammad Akram.
Meanwhile, JS Research analyst Ahmed Lakhani said, “Gross margins contracted by 477 basis points year-on-year on the back of continued repercussions of rupee devaluation, given high proportion of imports in the company’s raw material costs.”
Finance cost jumped an exorbitant 96.5% to Rs19.5 million in the period under review from Rs9.9 million in the previous year.
Other income fell 34% to Rs694.8 million, mainly due to lower short-term investments, which stood at Rs23 billion as per latest balance sheet numbers, compared to Rs55 billion in 1QFY19, Akram added.
He said administration and distribution expenses increased 12% and 25% year-on-year respectively due to inflationary pressures, which kept the bottom-line at lower level.
Akram highlighted further rupee devaluation, increase in non-production days and adverse regulatory changes as key risks for the company.
The share price of Indus Motor dropped Rs12.25 or 1.31% to Rs925.75 with trading in 1,940 shares at the PSX. The benchmark KSE 100-share Index recorded a decrease of 64.08 points, or 0.19%, to settle at 33,797.51 on Tuesday.
Published in The Express Tribune, October 30th, 2019.
In line with expectations, Indus Motor Company’s profit took a hit as earnings declined 62.4% to Rs1.32 billion in the quarter ended September 30, 2019 owing to deteriorating volumes.
The company had posted a profit of Rs3.51 billion in the same period of previous year, according to a notice sent to the Pakistan Stock Exchange (PSX) on Tuesday.
Earnings per share stood at Rs16.78 in the quarter under review compared to Rs44.63 in the corresponding period of previous year.
The board of directors announced an interim cash dividend of Rs7 per share for the quarter. Net sales dropped 41% to Rs20.7 billion in the Jul-Sept 2019 quarter from Rs34.9 billion in the same quarter of previous year, which was expected due to a plunge in volumes. The decline in topline came despite an increase in prices of all variants as car sales continued to decline.
“Volumetric sales are down 57% year-on-year due to higher car prices, new FED charges imposed in the FY20 budget, higher interest rate for auto financing and economic slowdown,” said Topline Securities’ analyst Hammad Akram.
Meanwhile, JS Research analyst Ahmed Lakhani said, “Gross margins contracted by 477 basis points year-on-year on the back of continued repercussions of rupee devaluation, given high proportion of imports in the company’s raw material costs.”
Finance cost jumped an exorbitant 96.5% to Rs19.5 million in the period under review from Rs9.9 million in the previous year.
Other income fell 34% to Rs694.8 million, mainly due to lower short-term investments, which stood at Rs23 billion as per latest balance sheet numbers, compared to Rs55 billion in 1QFY19, Akram added.
He said administration and distribution expenses increased 12% and 25% year-on-year respectively due to inflationary pressures, which kept the bottom-line at lower level.
Akram highlighted further rupee devaluation, increase in non-production days and adverse regulatory changes as key risks for the company.
The share price of Indus Motor dropped Rs12.25 or 1.31% to Rs925.75 with trading in 1,940 shares at the PSX. The benchmark KSE 100-share Index recorded a decrease of 64.08 points, or 0.19%, to settle at 33,797.51 on Tuesday.
Published in The Express Tribune, October 30th, 2019.