Honda Atlas profit dives 74% to Rs710.2m

Published: January 24, 2020
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Representational image. PHOTO: REUTERS

Representational image. PHOTO: REUTERS

KARACHI: Honda Atlas Cars’ profit plunged 74% to Rs710.2 million in nine months ended December 31, 2019 on the back of a colossal drop in volumetric sales.

The company had recorded earnings of Rs2.68 billion in the same period of previous year, according to a notice sent to the Pakistan Stock Exchange (PSX) on Thursday.

Earnings per share stood at Rs4.97 in Apr-Dec 2019 compared to Rs18.78 in the previous year. Sales of the company dipped 44.5% to Rs39.4 billion in the period under review compared to Rs70.96 billion in the previous year.

“A drop in profitability was generally expected, given the major contraction in volumes during the (Oct-Dec) quarter (down 66% year-on-year),” a JS Research report said.

“However, the actual result significantly underperformed market expectations, due to the disappointing gross margins.”

“The decline in margins came amid rupee depreciation, higher fixed cost per unit on the back of lower utilisation of plant and increase in duties on imported raw material,” the report added.

Meanwhile, other income of the company also took a hit and plummeted 80% to Rs210.3 million in the Apr-Dec 2019 period, from Rs1.04 billion in the previous year.

Finance cost surged 69 times to Rs577.3 million due to higher interest rate and increase in borrowings to meet working capital requirements. Share price of the company was down Rs11.62 or 5.5% to Rs199.78 with trading in 414,800 shares at the PSX on Thursday.

Earnings in the third quarter turned in a loss as Honda Atlas reported a loss of Rs41.3 million in Oct-Dec 2019 compared to a profit of Rs601.6 million in the previous year.

According to Topline Securities’ analyst Hammad Akram, “The 3QMY20 earnings came in below our expectations on account of lower-than-expected gross margins and higher-than-expected finance cost.”

“We flag unfavourable movement in the exchange rate, regulatory changes, increased competition from existing and new players as key risks for the company,” he added.

Published in The Express Tribune, January 24th, 2020.

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Reader Comments (2)

  • Salman Khurram
    Jan 24, 2020 - 10:56AM

    It is very good that profits of these looters are declining, hopefully with more players getting into market, these three Japanese companies will either put their house in order or go bankrupt. They have looted Pakistanis for far too long with pathetic quality products for exuberant prices.Recommend

  • irfan
    Jan 24, 2020 - 12:19PM

    This is good, keep rising price so that company may be closed as early as possible, since they have looted Pakistan Recommend

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