Indus Motor posts 63% dip in profit

Decline comes on back of massive drop in sales volume during final quarter

Indus Motor Company’s profit fell 63% to Rs5.1 billion during the year ended June 30, 2020 due to a massive drop in sales volume during the final quarter.

According to a notice sent to the Pakistan Stock Exchange on Monday, the company reported a profit of Rs13.7 billion during fiscal year 2018-19.

Accordingly, the earnings per share (EPS) of the company clocked-in at Rs64.66 during the year under review against Rs174.49 in the previous fiscal year. Alongside the result, the company also announced a final cash dividend of Rs7 per share, thus taking the full year payout to Rs30 per share.

“The decline in turnover and profitability for the year was mainly due to lower volumes, primarily due to challenging economic conditions, imposition of taxes and duties and lockdown on account of Covid-19 pandemic,” according to a company statement.

It added that the industry already burdened by inconsistent economic policies; has now been exposed to additional challenges on account of the Covid-19 outbreak.

Topline Securities analyst Hammad Akram said the revenue of Indus Motor Company declined 45% in fiscal year 2020 compared to last year, which was mainly attributable to 57% year-on-year fall in unit sales.

He said that the demand for new cars remained depressed throughout the outgoing year due to high car prices coupled with negative impacts of Covid-19 on consumer buying.

He added that solely in the fourth quarter of FY20, revenues declined 78% year-on-year and 69% quarter-on-quarter due to Covid-19 related lockdowns leading to unit sales dropping 81% year-on-year and 72% quarter-on-quarter. He pointed out that the company had 55-60 non-production days during the final quarter.

“The other income of Rs11.04 on every share in fourth quarter of FY20 supported the bottom line of the company,” he said. “However, it also declined 22% quarter-on-quarter amid monetary easing by the State Bank of Pakistan (SBP), which resulted in lower interest rates.”

Indus Motor’s other income dropped 26% to Rs3.2 billion for the year ended June 30, 2020 from Rs4.31 billion in the same period of the previous year.

Meanwhile, the company’s finance cost jumped 27% to Rs85.7 million in the period under review compared to Rs67.4 million in the same period of the previous year. Indus Motor’s share price rose Rs24.17 or 1.76% to trade at Rs1,396.80 with a volume of 24,100 shares on Monday. The KSE-100 benchmark index recorded a decrease of 114.93 points, or 0.29%, to settle at 39,914.76 points.

Published in The Express Tribune, August 11^th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.