Pak Suzuki Motor Company (PSMC) has reported a significant loss of Rs6.3 billion, with outstanding foreign liabilities of $184 million, for the year ending December 31, 2022.
According to a notice issued by the Pakistan Stock Exchange (PSX) on Monday. The company had current foreign liabilities of $184 million at the year’s end December 31, 2022, which escalated to a comparable $218 million after year’s end.
Tahir Abbas, head of research at Arif Habib Limited (AHL), said that these assets are denominated in dollars and increase as the value of the dollar rises compared to the rupee.
The rupee has lost almost 65% of its value compared to the US dollar in just one year, falling from roughly Rs175 to about Rs280. “Business purchases their raw materials in dollars from foreign nations, thus they must remit payments in dollars. But because of the state of the nation, the company’s obligations grew,” added Abbas.
According to Pak Suzuki, “up to December 31, 2022, the company incurred an exchange loss of Rs3.55 billion on foreign currency transactions and balances,” but “after the year-end, the rupee to dollar parity has further deteriorated and resulted in a massive unrealized loss of Rs9 billion (approximately)” that could affect the company’s equity in 2023.
The statement said, “If the foreign currency liability is not paid due to the limits imposed by the State Bank of Pakistan (SBP), the business’s exchange loss would further increase, significantly affecting the equity of the company in the financial year 2023.
In its results for the fourth quarter of 2022, the company reported a loss of Rs3.8 billion as opposed to a profit of Rs489 million during the same period the year before, according to a Topline Research analysis. The company’s loss per share (LPS) was Rs46.5 in the fourth quarter of 2022 compared to EPS of Rs5.9; this brings the full-year loss for 2022 to Rs6.3 billion or an LPS of Rs77 per share. Higher-than-expected finance expenses caused the results to fall short of what the industry had expected, according to Sunny Kumar, an analyst at Topline Research, who was supported by Insight Research.
“Interest expenses, which comprise exchange loss, the charge for late delivery, and demurrage and detention charges, were up 16% YoY to Rs11.6 billion in 2022 and up 14% YoY to Rs5.0 billion in the fourth quarter of 2022 (4Q2022),” stated Kumar.
Gross margins for the fourth quarter of 2022 (4Q2022) were 9.8% higher than the 5.2% reported for the same time the previous year and also higher than the 4.1% margin for the first nine months of 2022 (9M2022). According to Insight Research, improved gross margins may have been brought about by rising automobile prices, declining freight costs, and considerable cost-cutting initiatives.
“Revenues for the quarter improved by 101% QoQ, led by 91% QoQ growth in unit sales of the company. The YoY growth in revenue is primarily due to an increase in car prices,” said Kumar said.
In keeping with the rise in volumetric sales, distribution and marketing costs increased by 15% YoY and 111% QoQ to Rs1,067 million in the fourth quarter of 2022.
The company’s Other Income likewise showed a decline of 37% YoY and 45% QoQ to Rs583 million in 4Q2022, paralleling the decline in bookings. The company reported tax expenses of Rs3.4 billion in the fourth quarter of 2022 as opposed to Rs221 million in the same quarter the previous year, and a tax reversal of Rs976 million in the third quarter of 2022.