Profits at Toyota’s Pakistan affiliate hit all-time high in 2012

Published: August 10, 2012
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Indus Motors sold over 55,000 cars during the financial year that ended on June 30, 2012, its highest ever for a single year. Both revenues and profits were the highest in the company’s history in Pakistan.

Indus Motors sold over 55,000 cars during the financial year that ended on June 30, 2012, its highest ever for a single year. Both revenues and profits were the highest in the company’s history in Pakistan.

KARACHI: Global automobile giant Toyota’s affiliate in Pakistan announced that the 2012 financial year was its most profitable ever in the country, earning Rs4.3 billion in net income, a 57% increase over the previous year.

Indus Motor Company – a company that is 37.5% owned by Japan’s Toyota – announced its annual results on Thursday. The company’s revenues rose by nearly 25% to reach Rs75 billion, largely on the back of increased car sales, though higher prices were also a factor. The company sold over 55,000 cars during the financial year that ended on June 30, 2012, its highest ever for a single year. Both revenues and profits were the highest in the company’s history in Pakistan.

Investors in Indus Motors are likely to be pleased by the management’s decision to announce a Rs24 per share dividend, bringing the total annual payout to Rs32 per share. Given the company’s earnings per share of Rs54.74, that comes to a payout ratio of 58.5%.

Indus Motors assembles the Toyota Corolla, easily the most popular sedan in the Pakistani market, made even more attractive by the company’s wide network of dealerships and after-sales service points, which help the car retain a high resale value. As incomes in Pakistan’s urban middle class have recovered after the 2008 financial crisis, sales of the sedan have bounced back to pre-crisis levels.

Nonetheless, analysts point to several dangers to the company’s business. “Demand for new cars in Pakistan will decline, going forward,” said Atif Zafar, a research analyst at JS Global Capital, an investment bank. “Local car manufacturers are expected to remain under pressure from competition with imported used cars.”

Nonetheless, sales figures for new cars have been improving, reaching a four-year high of over 157,000 units in 2012, an almost 23% increase over the previous year. Indus Motors share of that is almost 35%.

Officials at Indus Motors concurred with JS Global’s assessment that new car demand had slowed in recent weeks, largely due to an expectation among car buyers that the government will relax rules on the import of used cars. Low demand is forcing local manufacturers to cut back on production, they said. Indus suspended its production for four days in July and plans six off-days in August to offset the problem of slow demand.

The largest carmaker of country, Pak Suzuki Motors, is also expected to see a hit in its sales this year. This year, the Punjab government has allocated fewer funds for the Punjab taxi scheme so one can expect that Pak Suzuki may get less orders compared to last year’s order of 20,000 units, Zafar said.

While car importers vow to double car imports this year, local carmakers are continuously pressuring the government to reduce the age-limit of used car imports from the current five years to three years. Pakistan imported 55,000 cars in fiscal year 2012, a massive increase over the 18,000 cars in previous fiscal year.

Published in The Express Tribune, August 10th, 2012.

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Reader Comments (4)

  • Len Aziz
    Aug 10, 2012 - 5:48AM

    This is a proof of how Pak manufacturer are making fool of politician that because of import they will lose business?

    It’s about time people of Pakistan wake up and demands from their elected MNA MPA and every Tom, Dick and Harry to opens the import of ALL second hand Cars.

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  • Aug 10, 2012 - 6:59AM

    The recent trends show that double digit increases in car sales will continue for the foreseeable future. Instead of worrying about imports, the domestic auto makers in Pakistan should focus on increasing indigenization to reduce costs and compete more effectively.

    http://www.riazhaq.com/2009/03/auto-industry-prospects-in-india-and.html

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  • Aug 10, 2012 - 10:45AM

    Recent trends indicate that double digit increases in car sales will continue for the foreseeable future. Instead of worrying about imports, the domestic auto makers in Pakistan should focus on increasing indigenization to reduce costs and compete more effectively.

    http://www.riazhaq.com/2009/03/auto-industry-prospects-in-india-and.html

    Recommend

  • Saif
    Aug 30, 2012 - 6:19PM

    We need more car variants specially small cars from our local automobile manufacturer, Honda and Toyota please introduce small cars here, why you don’t see the scope ? or is it just a monopoly ? Toyota can introduce small cars with the brand of Daihatsu, setup a plant here, stop the import, Government should make a policy and force these car manufacturer to produce in Pakistan and rely on lessor imports. If we get enough options of cars from local market no one will look for the imports.Recommend

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