Pak Suzuki goes from profit to loss

High import cost, rupee fall reverse earnings of automobile company

Our Correspondent April 27, 2022


Pak Suzuki Motor Company (PSMC) has reported a net loss of Rs460.2 million in the first quarter ended March 31, 2022, mainly due to a surge in the import cost of parts amid massive Pakistani rupee depreciation.

The company had posted a net profit of Rs777.9 million in the same quarter of the previous year, according to a statement sent to Pakistan Stock Exchange (PSX) on Tuesday.

Accordingly, it incurred a loss per share of Rs5.59 in the quarter under review compared to earnings per share of Rs9.45 in the corresponding quarter of the previous year.

PSMC’s share price dropped 5.74% (or Rs12.21) to Rs200.49 with 152,043 shares turnover at PSX.

“The result is below our expectations, due to lower-than-expected gross margins and higher (rupee-dollar) exchange loss coupled with the markup on late deliveries,” Insight Research said in a post-result commentary.

During the first quarter, revenue stood at Rs47.7 billion compared to Rs36 billion in the same period of the previous year, up by 33% year-on-year. “The increase in revenue is mainly attributable to volumetric growth coupled with price revision.”

Gross margins clocked in at 2.8% in the quarter against 6.1% reported in the same period last year “due to rupee devaluation coupled with higher freight cost”.

Other income clocked in at Rs527 million against Rs619 million, down by 15% due to decline in cash and cash equivalents.

The selling and distribution cost clocked in at Rs732 million against Rs710 million, up by 3%. The increase in distribution cost is due to an increase in volumetric sales coupled with a rise in freight charges.

Financial charges clocked in at Rs1 billion against Rs250 million, up by 312%. “The increase in financial charges is mainly attributable to increase in policy rate followed by exchange loss,” the research house said.

Indus Motor results

Indus Motor Company’s (IMC) net profit surged 41.6% to Rs5.1 billion in the third-quarter ended March 31, 2022 due to multiple upward revision in car prices and surge in other income.

Accordingly, the company recommended a third interim cash dividend of Rs26 per share to the shareholders, whose names would appear in the register on May 9, 2022.

The new entitlement is in addition to the interim dividend already paid at Rs64.5 per share.

The company had booked a profit of Rs3.6 billion in the same quarter of the previous year, according to a notice sent to PSX.

The company’s earnings per share surged to Rs65.11 in the quarter under review compared to Rs45.98 in the same quarter of the previous year.

IMC’s share price, however, dropped 1.79% (or Rs24.51) to Rs1,347 with 16,092 shares turnover at PSX.

“The upsurge (in profit) is primarily driven by higher other income (up 122% year-on-year) and higher sales revenue (up 32% year-on-year),” Arif Habib Limited (AHL) analyst Mahe Rukh Fatima said in a post-result commentary.

The cumulative nine-month profit surged 82% to Rs15.3 billion (earnings per share of Rs194.56) compared to Rs8.4 billion (earnings per share of Rs107.07) in the same period of the previous year.

In the quarter under review, the net sales grew to Rs68.2 billion, up 32% year-on-year amid “series of upward revisions in car prices together with higher volumetric sales (11.9% year-on-year)”.

Albeit, on a quarter-on-quarter basis, the sales dropped 2% “due to subdued production during the period owing to some maintenance work”.

The nine-month sales revenue surged 55% to Rs203.4 billion.

Gross margins stood at 7.67% during the latest quarter, down 154 basis points amid relatively higher cost pressure (mainly freight cost and steel prices) together with significant rupee devaluation during the quarter.

This took margins in nine-month to 8.64%, up 44 basis points given the passed-on price has largely absorbed the impact of rising cost pressure, the analyst said.

Other income depicted a substantial growth of 2.2-times during the quarter, mainly driven by higher advances from customers and elevated interest rates.

Published in The Express Tribune, April 27th, 2022.

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