Pak Suzuki Motor – the country’s largest carmaker with over 50% market share – has posted a net profit of Rs1.03 billion in the first half ended on June 30, 2014, down 11% from Rs1.16 billion in the corresponding six-month period of the previous calendar year.
Earnings per share (EPS) of the company remained Rs12.58 in the first six months (January to June) compared to an EPS of Rs14.05 in the same period of the previous calendar year.
During the first six months, revenues increased to Rs29.1 billion, up 8.3% year-on-year from Rs26.9 billion in the same period last year.
However, volumetric sales increased to 42,116 units, up 1.9%, compared to 41,326 units in the first six months of the previous year.
Gross margins improved by 177 basis points (bps) to 7.6% primarily due to lesser increase in cost of sales due to the Pakistani rupee appreciation compared to increase in sales revenues.
Other income during the period under review declined massively by 47% to Rs296 million compared to Rs564 million. The distribution cost increased by 70.5% to Rs410 million while administrative cost increased by 22% to Rs537 million in the first six months of the current year.
Furthermore, total tax of the company also surged massively by 175% to Rs424 million compared to Rs154 million because company shifted from turnover tax last year to corporate tax now.
Additionally, the company earnings also declined in its second quarter. It earned a net profit of just Rs592 million during the second quarter (April to June 2014), down 25% compared to Rs794 million in the second quarter of calendar year 2013.
The drop in earnings in second quarter is peculiar due to the company’s launch of the much-awaited 1,000cc car, Suzuki Wagon R, in mid April 2014 that supported the sales of Pak Suzuki Motor.
The current calendar year for the company began on a positive note, as its profits jumped by 22% in the first quarter of 2014 compared to the corresponding period in calendar year 2013. It made a net profit of Rs443 million in the first quarter ended March 31 2014, up 22% compared to Rs362 million earned in the same quarter last year.
Last year in 2013, Pak Suzuki showed an exceptional jump in profits when it reported a net profit of Rs1.85 billion, up 89% against the income of Rs978 million in 2012.
Published in The Express Tribune, August 12th, 2014.
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@salman:
Would it not be simpler to get the govt out of car business. And to reduce import tariffs so that quality cars can compete. Current protectionist regime costs the consumers around Rs. 150 billion extra and we get the cars that you all have mentioned. Do we create jobs worth that much. And guess what, these profits go to the 3 car companies. This is called rent seeking and not earning a living
@Kamran: Instead of ban these vehicles i.e Mehran and Bolaan govt must force Pak Suzuki to introduce some safety feature in it. Mehran/Bolaan is still selling like hot cake all over Pakistan regardless its prices. If Pak Suzuki make these changes like Safety features etc i am sure they can beat the market of luxury cars. People here are looking for small family car with better fuel economy. Wagonr is good start although.
@Tokyo: @Kamran: Their products compete with the Nano in terms of quality. People should buy Nano instead.
Every japanese car built/assembled in pakistan is not worth the money it's sold. If our Govt. Is corrupt and doing notthing about it we request H.E japaneseAmbassador to take notice of the situation and force japanese car makers to have mercy on this poor nation and improve standards.
If Pak Suzuki would get rid of the junk it builds like the Mehran and Bolan then maybe it's profits would rise. They finally introduced the Wagonr which is selling quite well. This should let them know that people do not want deathtraps like the Mehran. It;s better to buy a 10 year old Honda city than a brand new Mehran. If you ever saw what a Mehran or a Bolan looks like after a 45 KPH accident you would understand. More people die in those two models as a percentage of accident totals than any other passenger vehicles in Pakistan.
The government should ban these two vehicles as a hazard to Pakistanis.