KARACHI: Honda Atlas Cars’ profit dropped 51% to Rs509.7 million in the quarter ended September 30, 2019 on account of lower sales and a significant decline in other operating income.
The company had posted a profit of Rs1.03 billion in the same quarter of previous year, according to a notice sent to the Pakistan Stock Exchange on Thursday. Its earnings per share (EPS) came in at Rs3.57 in the Jul-Sept 2019 quarter compared to Rs7.22 in Jul-Sept 2018.
Nevertheless, the result was above market expectations.
“Honda Atlas reported its 2QMY20 earnings which were above expectations with the EPS at Rs3.57 (down 50% year-on-year), dragged down by lower sales as well as lower gross profit margins,” said Topline Securities’ analyst Hammad Akram.
Net sales of the company stood at Rs11.6 billion, down 55% compared to Rs25.8 billion in the same period of last year. Gross profit showed a decline of 26.2% to Rs1.2 billion against Rs1.6 billion last year.
Net sales of the company fell due to 67% fall in volumes during the quarter under review, the analyst pointed out. “The decline in volumes was led by 68% lower City and Civic sales in the quarter while BR-V also depicted a declining trend with 59% drop in sales,” he said. Other operating income of the company dived to Rs25.1 million during the quarter under review against Rs360.3 million in the corresponding period of previous year, down 93%.
According to the analyst, the decline in operating income stemmed from a low base of short-term investments as advances received from customers had been on a declining trend due to decreasing demand.
Moreover, he pointed out that finance cost of Honda Atlas soared 10 times during the Jul-Sept 2019 quarter because of increased borrowing at higher interest rates. On a half yearly basis, the company reported a plunge of 64% in earnings which came in at Rs751.4 million. The company reported a profit of Rs2.1 billion in the same six months of previous year.
Published in The Express Tribune, November 15th, 2019.
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