Corporate result: Indus Motor’s profit up 135%

Earnings recorded at Rs9b during FY15; somewhat below expectations

KARACHI:

Driven by volumetric growth, Indus Motor Company (IMC) boosted its net earnings by a whopping 135% to Rs9 billion in fiscal year 2015, but the performance fell slightly short of market expectations.

The makers of Toyota Corolla in Pakistan posted an after-tax profit of Rs9.1 billion or Rs116 per share in the year under review, up 135% compared to Rs3.9 billion or Rs49 per share in the corresponding year, according to a notice sent to the Karachi Stock Exchange (KSE) on Friday.

The results were accompanied by a cash dividend of Rs40 per share, which is in addition to the interim cash dividend of Rs40 per share already paid to shareholders, taking the total dividend for the year to Rs80 per share.

IMC out-performed the benchmark KSE-100 Share Index by 32% (calendar-year-to-date), AKD research said in its report. The report added that gross margins improved by 461 basis points to 14.8% in FY2015 on higher capacity utilisation and favourable currency parity. Moreover, it said other income increased by 161% to Rs2.9 billion in the year under review, which also contributed to net earnings.



Despite more than doubling its profits, IMC’s results fell short of street consensus. As a result, its share price - which reached a high of Rs1,270.9 in anticipation of a good result during intraday trade - declined by Rs18.7 or 1.5% compared to Rs1,210.4 of the previous day. It settled at Rs1,191.7 at the close of market with 95,860 shares changing hands on Friday.

“The results are slightly below market expectations,” Taurus Securities’ Head of Research Zeeshan Afzal told The Express Tribune, adding he had expected net earnings to be at least Rs122 per share.

On a sequential basis, net earnings were down by 18% while sales declined 2% in the quarter ending June 30, 2015, taking gross margins down by 60 basis points, Afzal said, adding the 3% super tax also dented net earnings.

However, on a year-on-year (YoY) basis, the Japanese automobile giant increased its revenues by 69% to Rs96.5 billion in FY2015 compared to Rs57 billion of the corresponding year.

Explaining the annual gains, Afzal said the rise in net earnings was caused by a 77% YoY growth in the sales of IMC’s flagship car, Corolla, which helped increase overall volumes - helped by introduction of a new model. Depreciation of the Japanese yen, which reduced raw material costs, also contributed to the growth, he said, adding the company’s operating profits expanded by 185% y-o-y.

In a separate notice, IMC’s board of directors also announced that they had approved to increase the company’s authorised share capital from Rs1 billion to Rs5 billion.

Published in The Express Tribune, August 29^th,  2015.

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