Indus Motor’s profit dives 62% to Rs5.8 billion

Carmaker performs quite better on QoQ basis, earns 142% higher profit

KARACHI:

Indus Motor Company (IMC) has announced a substantial drop of 62% in its net profit in nine months ended March 31, 2023.

According to the financial results announced on Wednesday, the car manufacturer posted a profit after tax of Rs5.8 billion, which was markedly lower from Rs15.3 billion in the corresponding period of previous year.

Earnings per share (EPS) came in at Rs74.35 for Jul-Mar FY23 against EPS of Rs194.56 in the same period of last year.

The assembler of Toyota vehicles in Pakistan reported a net profit of Rs3.2 billion for the third quarter of fiscal year 2022-23. It marked a decline of 37% compared to Rs5.1 billion in the corresponding period of previous year.

In the third quarter (Jan-Mar), the EPS stood at Rs40.92, down 37% against Rs65.11 in the same period of last year.

However, on a quarter-on-quarter (QoQ) basis, IMC performed well and earned a 142% higher profit.

Topline Research analyst Sunny Kumar observed “the earnings came in higher than industry expectations on the back of higher-than-expected gross margins.”

Gross margins clocked in at 6.3% for the Jan-Mar quarter, higher than the expectation of 1.5%, he said, adding that the increase in gross margins was primarily due to the rise in car prices.

According to Arif Habib Limited auto analyst Muhammad Abrar, the increase in profit on a sequential basis can be attributed to the improvement in gross margins (+730 basis points QoQ), which resulted in an operating profit after two consecutive quarterly operating losses during FY23.

“In the third quarter, the topline of the company arrived at Rs48.2 billion against our estimate of Rs46.8 billion, declining by 3% QoQ primarily as a result of a 23% dip in car sales volumes.”

However, the gross margins returned to the green zone following two consecutive quarters of negative margins, arriving at 6.3% against the estimate of 1.1% fall and negative 1% in the preceding quarter, said Ismail Iqbal Securities auto analyst Muhammad Saad Imran.

“This can be attributed to multiple price hikes during the quarter by the company to combat cost pressures.”

The automaker also announced a third interim cash dividend of Rs24.40 per share, taking nine-month payout to Rs42.8 per share.

Net sales showed a decline of 29% YoY and 3% QoQ on the back of lower unit sales. The company recorded sales of 7,285 units in the third quarter of FY23 compared to 18,495 units in the same quarter of FY22.

On a QoQ basis, unit sales registered a decline of 23% in the third quarter mainly on the back of production issues amid shortage of completely knocked down parts, Kumar observed.

With the number of bookings declining, other income of the company depicted a fall of 5% YoY and 17% QoQ to Rs3,036 million in the third quarter.

Published in The Express Tribune, April 27^th, 2023.

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