Corporate results: Honda Atlas finally on the right track

Company reports profit of Rs244m accompanied with dividend payout of Rs0.25 per share.

Farhan Zaheer May 21, 2013
Auto assembler posts profit after incurring losses for four straight years, according to Sherman Securities. PHOTO: FILE


Honda Atlas Cars has reported Rs244 million as profit after tax for the year ending March 2013, up from a loss of Rs532 million last year. The company announced earnings per share (EPS) of Rs1.71 in 2013 compared to loss of Rs3.73 per share last year.

Analysts say the company is on the growth track, and its immediate outlook is positive like other auto companies operating in the country.

“Honda Atlas, like other auto companies operating in the country, is going to do good business in the near future,” said Atif Zafar, analyst at JS Global Capital.

Overall, the post-election economic scenario of the country is positive, as the incoming government is here with an aim to improve economic outlook. “I think the outlook of the auto industry is already positive because of the depreciating yen, which is bringing down the cost of production for auto companies, and the low imports of used imported cars since December 2012,” said Zafar.

“Moreover, volumetric sales of Honda and other auto companies are also expected to increase,” he added.

The auto industry’s sales in the next one year will depend on the core policies of Nawaz Sharif’s government. These include its macroeconomic policies, its policy for the auto industry and what this government wants to do about the wheat support price, said Sarfaraz Abbasi, analyst at Summit Capital.

“Auto sales will further increase in the next eight to 10 months if the government introduces a new policy for the auto sector, especially [if it is in the form of] a new five-year Auto Industry Development Plan,” he added.

This is the first time that Honda Atlas Cars has announced a dividend with its results, a modest Rs0.25 per share. The company has posted the annualised profit after remaining in losses for four consecutive years, Sherman Securities reported on Tuesday. Though the dividend payout is small, this is the company’s first cash dividend after seven years, the report said.

During 2013, the company’s EPS remained higher due to a more than 55% increase in volumetric sales and improvement in margins. The new Civic model launched by the company received a favourable response, while revised prices of the new model also lifted overall gross margins of the company.

In the March quarter alone, the company posted a robust Rs1.6 in EPS, which remained 181% higher than the preceding quarter’s earnings. Higher quarter-on-quarter (QoQ) earnings are due to a 67% improvement in car sales and a single percentage point improvement in gross margins.

In the March quarter alone, the company sold 6,463 units, while the gross margin of the company stood at a healthy 5.4%. Where higher car prices boosted QoQ margins, devaluation of the Japanese versus the rupee also supported profits.

Published in The Express Tribune, May 22nd, 2013.

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syed saiful islam | 8 years ago | Reply

hi viewes i have purchased 5000/- shares of honda atlas car @52 but i have sold last three monts @19 while i was holding this shares from 6y that was my bad luck

Haroon Rashid | 8 years ago | Reply

In view of merger acquisition globally Honda will merge with Toyota in 2027 as reported in Economist, London a Pearson Group publication with the Financial Times. As per WTO reccomendations, and reccomendations of CCP the CKD auto import will essentially be opened with the newly elected Government in the interest of the country. Vested interests, money launderers were importing thousands of cars by gift schemes on the eligibility of Pakistani expatriates used/re-furbished cars and commercial vehicles with no life cycle. The policy reccomendations should support legitimate import from importers/ditributors by car carriers, reducing container freight charges currently in practise. The car will have life span, and cycle for long life, and will eliminate grey market money launderers evading taxes etc. Honda is also a member of PAMA non standardise car made from Thai kit car imported from Thailand as CKD costing more as this is specially dis-assembled from the robotised assembly line in Thailand, to avial the import duty advantage. If the duty on CBU car is abolisehd on the conventional and hybrid, EV cars than the country will save billions of foreign wasted in the CKD assembly for cars. The Government is considering and reccomended to finance Ministry for abolition of taxes and import of CBU cars in Pakistan on hybrid and EV cars.

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