KARACHI: Hinopak Motors – the country’s largest truck and bus-maker – has posted a net profit of Rs394 million in the first nine months (April-December) of fiscal year 2013-14 (FY14), up by a whopping 1,870%, against just Rs20 million in the corresponding period the previous year.
Earnings per share (EPS) of the company improved to Rs32.13 against Rs1.64 in the same period.
The third quarter ending on December 2013 has brought good news for the company in which it earned Rs238 million or an EPS of Rs19.16 against just Rs17 million or an EPS of Rs1.41 in the third quarter of the previous year.
Despite the positive figures, a Hinopak Motors official expressed a few worries.
“Truck and bus manufacturing is not picking up pace,” the official said. “In fact, it is on a continuous decline for the last five years.”
Analysts say poor economic performance in the last five years has adversely affected truck and bus manufacturing in Pakistan. Moreover, the already weak sales of heavy-duty vehicles were further hit in FY11 when government reintroduced the general sales tax (GST) of 16% on their sales after a gap of five years.
“Low economic activity is directly hurting manufacturing. People who usually buy trucks target the coming five years to recover their investment but they are not opting for trucks now,” the company official added.
Income-wise, FY14 would be a good year for Hinopak but its biggest challenge remains the sales that are on a continuous decline. Sales have dropped to 1,262 units in FY13 after 3,705 units in FY09, down 66%.
Hinopak sales reflect the dwindling sales of trucks and buses in Pakistan. For instance, the overall sales of trucks in FY13 were just 1,923 units – lowest in the last 10 years in the country. Sales of buses were even more depressing as just 522 buses were sold in the last fiscal year – lowest in the last 14 years in the country.
In its last annual report, the company even respected its annual growth of Rs1 million to Rs27 million in FY13 against an income of Rs26 million in FY12. “Even in this unfavourable context the company was able to close the year with a marginal profit of Rs1 million for which the management and the work force deserve appreciation,” the company’s annual report of FY13 said.
Hinopak Motors is a listed company on the Karachi bourse with 89% majority shareholding of Hino Japan. With over 60,000 vehicles on the road, Hinopak has gained a 48% market share, making it the largest manufacturer in the medium and heavy-duty truck and bus industry in Pakistan.
Published in The Express Tribune, January 24th, 2014.