Corporate results: Indus Motor’s profits go up 15%
Indus Motor Company posted a net profit of Rs3.87 billion in the fiscal year (FY) that ended June 30, up 15% compared to the earnings of Rs3.36 billion in FY13.
Earnings per share (EPS) in FY14 clocked in at Rs49.28 compared to an EPS of Rs42.72 in the previous fiscal year.
“The main reason why the net profit of the company has improved despite dip in volumes was due to a 7% increase in the Pakistani rupee in the third quarter (January-March) 2014,” said Global Research analyst Imran Ahmed Patel.
“Rupee appreciation reduced the cost of imported parts, which is one of the biggest component for assemblers in Pakistan.”
Meanwhile, Global Research stated that the earnings were above market expectations.
“Indus Motor earnings were above our market expectation primarily due to higher than anticipated realised gross margin. This was because of the rupee appreciation in third quarter (January-March) of fiscal year 2014,” Global Research commented.
The company registered an earning of Rs1.55 billion or an EPS of Rs19.75 during the fourth quarter (April-June) of the fiscal year, depicting a decline of 5% year on year (and up 60% quarter on quarter).
The company’s board of directors announced a final cash dividend of Rs23.5 per share, taking the cumulative payout to Rs29.50 per share.
Sales declined 11% year-on-year to Rs57.06 billion during FY14 against Rs63.83 billion recorded during the last year. The primary reason for the decline in the company’s revenues was due to the discontinuation of the 10th generation Toyota Corolla model in July 2014, Global Research report added.
Moreover, imposition of 10% federal excise duty (FED) on Toyota Fortuner during fiscal year 2014 also negatively impacted the company’s volumetric sales for the said brand.
Consequently, the company’s completely knocked-down (CKD) sales declined 10% year-on-year to 33,997 units. On a quarterly basis, the company’s CKD sales clocked in at 7,270 units during fourth quarter 2014, down by a hefty 39% year on year (37% quarter on quarter).
Consequently, Indus Motor’s revenues registered at Rs12.30 billion during the period.
During the fourth quarter, the company experienced a significant improvement in its gross margin because of the rupee appreciation in the third quarter 2014.
As a result, the company’s gross margin clocked in at 14.7% during the period, despite a price cut offered on Toyota Corolla. On March 21, 2014, Indus Motor announced a 1-2% price cut on its different car models.
Bright future ahead
Patel added that the introduction of the new Corolla model will improve its sales and profits. The recent depreciation of the rupee by 3% is also going to hit the profitability of the company in the next quarter.
Published in The Express Tribune, August 28th, 2014.
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So Toyota Indus decides to sell the new E170 Corolla for PKR 2.2 million, with all of one airbag, and no stability/traction control...
The same car sells in Australia for PKR 2.3 million with 7 airbags, stability control, traction control, reversing camera and a better build quality to boot. No wonder Toyota Indus are killing it in profits even though sales may be flatlining.
Lack of competition and protection of vested interests goes a long way in ensuring even sub-par products get them disproportionate profits.
PS The picture is of an XV40-series Camry, which was superseded by the XV50 series model in 2012.
IMC profits despite declining market share, is an indicator for IMC to look for international markets particularly the regional markets. The flagship product Toyota Corolla made under the umbrella of self regulation of Standardisation of PAMA instead of the PSQC when sold in Pakistan as understood adheres to the safety, collision avoidance, environmental standards in Pakistan. The maintenance cycle and cost of lube oil change/drain cycle, turning radius, rear view camera etc., etc. As IMC is well aware of the fact for WHO which has organised a decade of road safety world wide. The WHO reccomendations for road safety, accidents, injuries, deaths, are on the rise. Congratulations: IMC is participating at the International Exhibition, Delhi in September 2014 participated by the CEO, Secretary, TDMA, hosted by FICCI, and all related organisations in India. This will be the first test of Corolla to undergo the safety, and standardisation tests stipulated by OICA, Paris and WHO Decade of Road Safety to check the Corolla for Road Safety Made in Pakistan. Indian's wold love to buy the Corolla and a bonanza of bilateral trade between India Pakistan. Pakistanis will buy the new Jaguar made by Tata Motors for Pakistani market, vis-a-vis Corolla Pakistan for the Indians love of Pak Corolla loaded with safety, features. Thanks CEO S.M. Muneer TDAP for this initiative to take Corolla to Delhi.