Pak Suzuki profits expected to increase by 107 per cent

Pak Suzuki Motor Corporation (PSMC) earnings are expected to have increased by 107 per cent in the second quarter of 2010 on a yearly basis. The company is expected to declare earnings per share of Rs2.07. KASB Securities analysts believe this is because of the company’s volumes rising 126 per cent this year as compared to last year.

Despite this, the market for cars is seasonal and varies depending on the time of the year. “Adjusting for seasonality and base effect, we expect 2H10E volumes to grow by 16 per cent on a yearly basis,” says KASB Securities analyst, Muhammad Saqib Sajjad.

He expects their ‘other income’ to have decreased due to the absence of advances and believes that rupee depreciation will continue to be a drag on the company’s earnings during the second quarter of 2010.

High car financing rates and a lack of pricing power could restrict earnings margins from recovering to their previous highs. However, stronger-than-expected volumes will improve the company’s bottom-line.

PSMC’s bottom line was also helped by the seasonal up-tick due to post-harvest agriculture demand and buyers rushing for delivery ahead of one percentage point increase in General Sales Tax.

Published in The Express Tribune, July 23^rd, 2010.