Earnings per share (EPS) increased to Rs19.57 from Rs18.56 in the same period previous year.
The nine-month earnings are higher than the estimates of Rs1.47 billion or an EPS of Rs17.90. The deviation in earnings was largely due to lower effective tax rate, which clocked in at 23%, against the expectation of 30%, Global Research reported on Wednesday.
During January to September 2014, the company’s profitability advanced by 5% year-on-year (YoY) primarily due to the improvement in gross margins and lower effective tax rate.
In the third quarter (July to September) of 2014, Pak Suzuki’s earnings amounted to Rs576 million or an EPS of Rs6.99, up 55% YoY compared to Rs371 million or an EPS of Rs4.51.
During the period under review, the company’s revenues depicted a growth of 5% YoY to Rs41 billion, primarily because of an increase in car prices by 5% and 7% YoY growth in motorcycle sales to 18,532 units.
However, the company’s car sales growth remained stagnant and clocked in at 59,147 units during the period.
On a quarterly basis, Pak Suzuki revenues registered a decline of 1% YoY to Rs11.92 billion during the third quarter of calendar year 2014, compared to Rs12 billion reported in the same period of last year. This decline was largely due to a 5% YoY decline in car sales volume because of a substantial increase in advance tax for non-filers announced in the federal budget for fiscal year 2015.
The company’s gross margins improved to 8.1% between January to September 2014 against 6.3% during the same period of last year. The expansion in margins was seen because of a reduction in the company’s import cost due to the Pakistani rupee’s appreciation against the US dollar. During the third quarter of calendar year 2014, the company’s gross margins clocked in at 9.2%, increasing by 180 basis points YoY.
Pak Suzuki’s other income posted a negative growth of 34% YoY to Rs439 million during the nine months of 2014 because of an absence of gain from the sales of property this year.
The company, during 2013, had sold its old production plant property that resulted in a one-time gain of Rs280 million or an EPS of Rs3. However, potential negativity in other income slowed down by an increased interest income from bank deposits. However, during the third quarter of calendar year 2014, other income improved by 42% YoY to Rs143 million.
The distribution cost jumped by 59% YoY to Rs590 million during the first nine months of calendar year 2014 because of Wagon-R’s brand activation activities during the period. For the third quarter of calendar year 2014, the distribution cost registered at Rs179 million increasing by 39% YoY.
Published in The Express Tribune, October 30th, 2014.
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