Pak Suzuki’s profit falls as sales drop

Punjab taxi scheme drove car demand last year.


Farhan Zaheer April 26, 2013
The turnaround came primarily on the back of improvement in gross margins to 4.7% as well as increase in sales volume. PHOTO: FILE

KARACHI:


Pak Suzuki Motor Company has posted profit after tax of Rs362 million in the first quarter of the current calendar year, down 38% from a year earlier when demand was driven substantially higher by the Punjab taxi scheme.


Earnings per share (EPS) remained at Rs4.40 in 1QCY13. “The result was above ours and consensus expectation of the market,” BMA Capital said in a report after the release of figures on Friday.

On a quarter-on-quarter basis, the first quarter results reflected a turnaround for the company as it switched to profit from a loss after tax of Rs189 million (loss per share of Rs2.41) in the fourth quarter of calendar year 2012, the report said.

The turnaround came primarily on the back of improvement in gross margins to 4.7% as well as increase in sales volume. Sales of the company rose significantly by 27% to 21,104 units in 1QCY13 versus 16,655 units in 4QCY12 following imposition of tougher age restrictions on the import of used cars.

However, JS Global Capital analyst Atif Zafar commented that more than anything else, the increase in profit of Pak Suzuki was mainly aided by the depreciation of the Japanese yen that has lost 15% of its value in the past six months.

“What is good for the domestic automobile assemblers is that the Japanese government is keeping the yen low to give a boost to its exports and that will continue to support the performance of these companies in Pakistan,” Zafar added.

In the first quarter of 2012, the Punjab taxi scheme pushed sales volume of Pak Suzuki substantially to 30,642 units. But after the end of the scheme, the volume stabilised at 21,104 units in 1QCY13 while competition from imported used cars also eased, the BMA report said.

The import of used cars has been on the decline since December when the government reduced the age limit for used cars from five years to three years. Though the decision has annoyed car importers, it has helped increase sales of locally assembled cars.

In March, domestic car assemblers increased sales by 6% to 13,344 units compared with 12,628 units in February.

Published in The Express Tribune, April 27th, 2013.

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COMMENTS (1)

billy bob | 10 years ago | Reply

now Pak Suzuki should reduce prices of their crappy cars to increase sales.

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