Corporate results: Indus Motor earnings up 27% as sales increase

Sales of Hilux Vigo rise, margins on Corolla improve.

KARACHI: Indus Motor on Tuesday reported a slightly higher than expected after-tax profit of Rs880 million, up 27% in the first three months of fiscal year 2013-14 against the profit of Rs691 million in the corresponding period of previous year.

According to Global Research, the company was expected to post a profit of Rs757 million or earnings per share of Rs9.63, but the earnings shot up because of higher than anticipated sales for Hilux Vigo – a four-wheel-drive pick-up the company produces. Earnings per share of the company jumped to Rs11.19 from Rs8.79.

The research house reported that the strong earnings of Indus Motor were because of improvement in margins on Corolla as yen weakened, making raw material imports cheaper. Other positives were increase in vehicle prices by up to 3% and lagging impact of rupee depreciation on import costs.



Revenues increased 6% year-on-year to Rs12.83 billion in the first quarter (July-September). Improvement in the topline came on the back of slightly better sales volume, edging up 1% to 8,419 units.

Analysts believe the sales volume had mainly been supported by reduced imports of used Japanese vehicles and fast depleting stocks of five-year-old used cars in the market.

For the quarter, the company’s gross profit margins widened 178 basis points to 10.4% compared to 8.6% last year. However, compared to the previous quarter, profit margins shrank 278 basis points against 13.2%. “We believe this decline in margins was mainly due to lower sales of Fortuner SUVs during first quarter of FY14 to just 120 units,” the research house said.

On a yearly basis, the company’s other operating income fell 23% to Rs232 million in the first quarter against expectations of Rs334 million. The key reason for the decline in the other operating income was lower than anticipated treasury earnings.

Published in The Express Tribune, October 23^rd, 2013.

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