IMC profits dive by 39%

Decline to Rs9.66b despite investing in high-return schemes

KARACHI:

Indus Motor Company (IMC), the assembler of Toyota cars in Pakistan, has witnessed a significant 39% decline in net profit, reporting Rs9.66 billion for the fiscal year ending on June 30, 2023. The drop in profit is attributed to a dwindling demand for four-wheelers, exacerbated by a substantial rupee devaluation and escalating costs of car financing.

Comparatively, the company’s profit for the previous fiscal year, FY22, had stood at Rs15.80 billion, underscoring the stark impact of prevailing economic challenges. The company’s profit data, disclosed through its profit or loss accounts available at the Pakistan Stock Exchange (PSX), painted a clear picture of the challenging scenario.

IMC’s net profit decline could have been more pronounced if not for shrewd investment decisions. The company’s decision to channel available funds into lucrative investments acted as a cushion against the backdrop of reduced car production activities. This strategic move is evident in the growth of other income, which surged to Rs14.18 billion in the year under review from Rs12.94 billion in the preceding year, as per the profit or loss accounts.

Earnings per share stood at Rs122.96 in FY23, a significant drop from Rs201.04 in FY22. Despite the challenging circumstances, IMC has announced a final cash dividend of Rs29 per share, supplementing the previously paid combined interim cash dividend of Rs4,280 per share.

IMC expressed in a press statement that the sales volume of both completely knocked down units (CKD) and completely built units (CBU) experienced a sharp 58% decline, plummeting to 31,602 units in the reviewed year from 75,611 units sold in the previous year. The company’s production figures also suffered, with 32,696 units produced in FY23 compared to 72,438 units in the prior year.

The financial performance was further impacted by a 36% decrease in net sales turnover, amounting to Rs177.71 billion in FY23, down from Rs275.50 billion in FY22. The decline is attributed to lower sales volumes of CKD and CBU vehicles, triggered by import restrictions and shrinking demand.

IMC’s Chief Executive, Ali Asghar Jamali, stated, “The automobile industry in Pakistan is facing the worst-ever economic downturn due to prevailing circumstances. Global disruptions, import restrictions on CKD kits, and demand contraction have led to plant closures, impacting industry employment.”

He highlighted that a cumulative effect of currency devaluation, rampant inflation, rising interest rates, and increased duties and taxes compelled the industry to raise car prices.

Published in The Express Tribune, August 29^th, 2023.

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