KARACHI: Indus Motor Company (IMC) booked a profit of Rs985.8 million in the second quarter ended December 31, 2019 against earnings of Rs3.4 billion in the same period of 2018, a decline of 71%, according to a notice sent to Pakistan Stock Exchange (PSX) on Wednesday.
In the Oct-Dec 2019 quarter, earnings per share (EPS) came in at Rs12.54 against Rs43.31 in the second quarter of previous year. “The earnings came in below our expectations on the back of lower-than-expected gross margins,” said Topline Research analyst Hammad Akram.
Furthermore, the company recorded after-tax profit of Rs2.3 billion in the first half ended December 31, 2019, down 66.7% compared to Rs6.9 billion in the corresponding period of previous year. EPS of the automaker stood at Rs29.32 in Jul-Dec 2019 against Rs87.94 in the same period of 2018.
Combined sales of completely knocked down (CKD) and completely built units (CBU), produced by Toyota-IMC, stood at 14,453 units in the first half of FY20. They were down 56% from sales of 33,087 units in the same period of previous year, according to a statement issued by IMC. According to the company, the decline was mainly due to increase in customs duty and levy of federal excise duty. It stated that while the rise in interest rate reduced auto financing, the devaluation of the rupee was also a factor behind the decline. IMC’s net sales revenue for the half year ended Dec 31, 2019 declined to Rs42.8 billion as compared to Rs76.4 billion in the same period of last year.
Board of directors of the company declared the second interim cash dividend of Rs6 per share for the half year.
The demand for automobiles declined significantly in Pakistan in the first half of FY20 due to a slowdown in the economy, devaluation of the rupee against the US dollar and various structural reforms and policies of the government, said the company.
It said the demand was also affected by the additional customs duty and federal excise duty coupled with rising inflation and declining purchasing power of consumers. Industry growth remained heavily dependent on consistent government policies and favourable economic conditions.
IMC CEO Ali Asghar Jamali said during this period, IMC remained focused on improving its operational efficiencies, maintaining high-quality standards, effectively managing cost pressures and delivering maximum value to its customers.
Published in The Express Tribune, February 20th, 2020.