Pak Suzuki posts almost double profits

Quarterly results, however, paint a dismal picture.

KARACHI: Pak Suzuki Motor Company (PSMC) has announced almost double profits for the 9MCY12 period, as compared to the same period last year, in its financial result announcement on Thursday. The company’s net profit has swelled to Rs1.17 billion in 9MCY12, as compared to Rs672 million in 9MCY11.

Strong growth in the company’s net sales were the primary driver behind growth, which boomed 24% year-on-year (YoY) to Rs47.90 billion on the back of higher prices and number of units sold.

“Exceptional volumes (up by 17% YoY) coupled with continuous price increases (of almost 7%) helped to keep the gross margins up by 90 basis points to 4.6% in the period under review,” said analyst Zoya Ahmed, who works with BMA Capital.

On a quarterly basis, however, the company’s result paints a gloomy picture. PSMC posted a loss of Rs193 million in the period, against analyst expectations of a profit.

“The deviation in estimates has come about due to incremental costs associated with upgrading variants to Euro-II compliance alongside higher than expected distribution costs,” said AKD Securities analyst Hassan Quadri.

The loss is also attributable to lower sales because of the suspension of the highly demanded Alto car, coupled with a fall in Mehran and Bolan sales post completion of the Government of Punjab’s yellow cab scheme.

Summit Capital analyst Muhammad Sarfraz Abbasi says that “higher prices of locally manufactured variants and availability of low-price alternatives in terms of imported cars have impacted the company’s sales in 3QCY12.”

Published in The Express Tribune, October 26^th, 2012.