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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