Pak Suzuki’s loss contracts 88% to Rs136.4 million

Rupee recovery, decline in interest rate help company contain loss

Pak Suzuki Motor Company’s loss contracted by a significant 88.2% to Rs136.4 million in the quarter ended September 30, 2020 on the back of rupee recovery and decline in interest rate.

According to a notice sent by the company to the Pakistan Stock Exchange on Tuesday, the automaker had reported a loss of Rs1.16 billion in the same quarter of previous year.

Accordingly, the loss per share of the firm came in at Rs1.66 in Jul-Sept 2020 against Rs14.11 in the corresponding period of previous year. During the quarter under review, the company registered sales of Rs22.6 billion, down 11.8% compared to Rs25.6 billion in the same quarter of last year.

Taurus Securities analyst Nabeel Dochki said during the Jul-Sept 2020 quarter, Pak Suzuki Motor’s revenue decreased 12%, despite a hike in selling prices, due to lower volumetric sales, which were down 24% year-on-year, impacted by the decline in demand, mainly for Alto.

“However, gross margins increased from -0.9% in the third quarter of 2019 to 5.2% in the quarter under review, supported by an increase in selling prices,” he said.

Other income of the company jumped 151.6% to Rs125.2 million in Jul-Sept 2020 as opposed to Rs49.8 million in the same quarter of previous year.

On the other hand, finance cost registered an increase of 19.31%. It rose to Rs458 million during the period under review compared to Rs383.8 million last year.

Talking to The Express Tribune, JS Global analyst Ahmed Lakhani said the company’s cost went down following appreciation of the rupee, which lent much-needed support and helped contain losses. According to him, the major reason behind contraction in the company’s loss was the hike in prices of its cars. “Rupee appreciation coupled with price hike of Suzuki cars helped turn gross margins positive,” he said.

In addition, low interest rate during the quarter pushed down significantly the auto financing cost and revived sales, which were earlier hit by the pandemic.

Nine-month figures

The automobile company reported a loss of Rs2.6 billion for nine months ended September 30, 2020, down 3.3% compared to Rs2.7 billion in the same period of last year.

Accordingly, the loss per share for nine months came in at Rs31.58 as opposed to Rs32.64 in the corresponding period of 2019.

Published in The Express Tribune, October 28^th, 2020.

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