Corporate results: Indus Motor profits jump on regular price hikes

Country’s best-selling car maker Corolla makes Rs2.89 billion in nine months.

KARACHI:

Indus Motor Company profits surged 79% in the current financial year as the car assembler used regular price hikes not only to protect profit margins but also increase them.

The country’s second largest car assembler profits stood at Rs2.89 billion in the first nine months of fiscal 2012 compared with Rs1.60 billion in the same period last year, according to a notice sent to the Karachi Stock Exchange.

The company’s gross margins rose 2.43% points on account of increase in the unit prices that more than compensated for rising cost pressures, according to analysts. Company’s gross margins improved to stand at 7.9% against 5.5% in the same period last year, said Global Securities analyst Sarfaraz Abid. Earnings were 20% higher than market expectation as analysts expected net profit, on average, to be around Rs1.74 billion.

Net sales, core contributor to profits, rose 19% to Rs53.93 billion compared with sales of Rs45.29 billion in the same last year owing to higher prices. Average car prices increased by 7% on a yearly basis during the period under review along with a smaller impact of 4% growth in numbers of cars sold, added Abid.

Combined sales of Toyota Corolla and Daihatsu Coure crawled up 3.6% only to 39,343 units during July 2011 and March 2012 compared with 37,987 for 2011.  Further depreciation in the rupee can force the company to go for another price hike as the company imports its major parts from Thailand and Japan, analysts said.

Published in The Express Tribune, April 24^th, 2012.