PHOTO: REUTERS
KARACHI: Honda Atlas Cars’ profit nosedived 82% to Rs681.8 million for the year ended March 31, 2020 due to a fall in sales volume while finance cost remained sharply higher.
According to a notification sent by the company to the Pakistan Stock Exchange on Tuesday, Honda Atlas had reported a profit of Rs3.85 billion in the previous year.
Earnings per share of the company fell to Rs4.77 in Apr-Mar FY20 as opposed to Rs26.97 in the previous year.
The automaker announced final cash dividend of Re1 per share for the year ended March 31, 2020. Net sales of the company were recorded at Rs55 billion, down 42% compared to Rs95.1 billion in the previous year.
According to Topline Research analyst Hammad Akram, the significant decline in earnings for Honda Atlas in the year under review was mainly attributable to the declining sales volume as volumetric sales dropped 54% on a year-on-year basis.
He added that a substantial increase in finance cost was also witnessed during the year compared to the previous year. Distribution cost of the company registered a decrease of 28% from Rs931.8 million in the previous year to Rs668 million in the period under review.
Finance cost soared 6,401% to Rs727.4 million compared to Rs11.2 million last year.
“The substantial rise in finance cost was due to increased borrowing to meet higher working capital requirement at high interest rates,” the analyst said.
According to the Topline Research report, the company booked effective taxation of 56% against 31% last year mainly on account of applicability of turnover tax.
During the day, the company’s share price rose Rs8.02 to close at Rs186.91 with 456,900 shares trading at the PSX.
Published in The Express Tribune, June 3rd, 2020.
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