Beating even the most optimistic scenarios predicted by analysts, Honda Atlas Cars Pakistan Limited posted an impressive after-tax profit of Rs328 million in the quarter to June 2013 compared to a loss of Rs221 million in the same period last year.
The company posted earnings per share of Rs2.29 against loss per share of Rs1.55 a year earlier.
Sales in the April-June period, the first quarter for the company whose financial year runs from April to March, grew a massive 83% and touched Rs10.9 billion compared to Rs5.96 billion in the same quarter of the previous year.
The earnings of the carmaker were 34% more than what it earned in the entire previous fiscal year 2012-13 (April 2012 to March 2013). Honda Atlas turned into profit by earning Rs244 million in 2012-13 after posting losses for four consecutive years.
The company did not announce any dividend for the quarter ended June 30, 2013. Last year, it declared a dividend of Rs0.25 per share for the whole year – the first cash payout after a gap of seven years.
Analysts attribute the sharp rise in sales to an overwhelming response of consumers to new car models of City 1.5L and Civic.
Increase in car prices and continuous depreciation of Japanese yen against Pakistani rupee improved gross margins of the company. In the April-June quarter, Honda Atlas increased car prices by 5% year-on-year whereas the yen fell 15% from a year ago, said Invest Capital research house in a report.
The research house also expected the demand for the company’s new models to lead to an increase in assembly of cars to 100 units per day from the current level of 90 cars.
Honda Atlas is the smallest player in the Pakistan market compared to Pak Suzuki Motor, the market leader, and Indus Motor, the makers of Toyota Corolla. However, Honda Atlas was the only company which saw its sales jump in the previous fiscal year ended June 30 with sales of Pak Suzuki and Indus dropping 33% and 31% respectively.
In FY13, Honda Atlas’ sales rose a healthy 75% to 21,235 units compared to 12,119 units a year earlier. The boost came primarily because of higher production during the year compared to the previous year when production slowed down after floods in Thailand. The company imports most of its parts from Thailand.
Sales of Honda Civic, in particular, surged 100% whereas Honda City posted a decent growth of 58%.
Analysts believe that the company will continue to grow faster than its peers on the back of strong demand for new car models.
Locally assembled car sales are expected to go up in fiscal year 2013-14 by at least 5-10% in the wake of a continuous decline in used car imports. Car imports have been falling since December 2012 when the government slashed the age limit for import of used vehicles to three years from five years.
Published in The Express Tribune, July 27th, 2013.
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