Slump in sales triggers Rs9.6bn half-year loss for Pak Suzuki

• Company remained non-operational during first-half of 2023.
• Loss per share for PSMC was Rs117.58 during year's first half.
• Auto manufacturer's revenue slumped to Rs43.182 billion this year.

KARACHI: The country's largest car assembler, Pak Suzuki Motor Company Limited, has reported a Rs9.68 billion net loss for the year-ended June 30, 2023, to the Pakistan Stock Exchange, The News reported Saturday. 

The company's sales took a plunge following import restrictions and weak demand and its losses, as reported in the statement sent to PSE, jumped significantly from last year's loss of Rs17.238 million. 

The automobile manufacturer's investors also missed a dividend for the aforementioned period.

The drop in the company's sales came following a halt in its operations during the said period due to inventory shortages.

Compared with a loss per share (LPS) of Re0.21 from January to June 2022, the LPS came in at Rs117.58 this year. 

Pak Suzuki stated that its revenue for the year slumped to Rs43.182 billion, as compared to Rs112.624 billion last year.

The cost of sales, however, remained at Rs39.037 billion from Rs108.415 billion during the same period last year. Finance costs rose to Rs10.141 billion against Rs1.842 billion last year, which increased losses.

For the quarter ended June 30, the company announced a profit of Rs3.238 billion, compared with Rs442.989 million during the same quarter last year. Earnings per share for the quarter came at Rs39.36 compared with earnings per share (EPS) of Rs5.38 last year.

Analysts said the second quarter result came above street consensus because of the higher gross margin on the back of multiple car price hikes during the period and finance income of Rs2.6 billion, driven by the exchange gains on account of the decline in JPY/PKR parity.

The company posted revenue of Rs21.3 billion, down by 67% year-on-year and 2% quarter-on-quarter because of lower volumetric sales on the back of raw material supply shocks due to import restrictions and weak demand.

The company posted a gross profit margin of 10% in 2QCY23 as opposed to 4% in the same period last year. The surge is attributed to multiple car price hikes in 1HCY23. The company recorded other income of Rs774 million in 2QCY23, down 25% year-on-year because of a decrease in short-term investment due to a decline in advances from customers.

PSMC recorded a finance income of Rs2.6 billion in 2QCY23 as opposed to the finance cost of Rs811 million in the same period last year. This is attributed to exchange gains driven by the depreciation of the Japanese yen.

The country's auto sector is especially facing economic headwinds, including the sector's inability to secure Letters of Credit (LCs) needed for imports.

In addition to the LC issue, the sector is also faced with depressed demand due to higher prices and record-high interest rates. A falling rupee is not helping either.

Car sales dropped by a whopping 57% year-on-year (YoY) in the first month of the fiscal year 2023-24, as per data given by Pakistan Automotive Manufacturers Association (PAMA).

The registered car manufacturers with PAMA cumulatively sold only 5,092 units in the month of July. The month-on-month (MoM) decrease stood at 16%, as per the data.