Pak Suzuki Motor Company Limited, the country’s largest automobile manufacturer, has recorded a net loss of Rs9.68 billion to the Pakistan Stock Exchange for the fiscal year ending June 30, 2023.
Following import restrictions and weak demand, the company’s sales fell dramatically, and its losses, as disclosed in the PSE statement, increased significantly from last year’s loss of Rs17.238 million.
Investors in the automaker also missed a payout during the same time period.
The company’s sales dropped as a result of a halt in operations during that time due to inventory constraints.
In comparison to a loss per share (LPS) of Re0.21 from January to June 2022, the LPS this year was Rs117.58.
Pak Suzuki said that its income for the year fell to Rs43.182 billion, down from Rs112.624 billion the previous year.
However, the cost of sales remained unchanged at Rs39.037 billion, down from Rs108.415 billion in the same period last year. Finance expenditures surged to Rs10.141 billion from Rs1.842 billion previous year, increasing losses.
The company reported a profit of Rs3.238 billion for the quarter ended June 30, compared to Rs442.989 million in the same quarter previous year. Earnings per share (EPS) for the quarter were Rs39.36, compared to Rs5.38 in the previous year.
According to analysts, the second quarter result was above the street consensus due to increased gross margins due to several automobile price increases over the period and finance income of Rs2.6 billion, driven by exchange gains due to the drop in JPY/PKR parity.
Revenue was Rs21.3 billion, down 67% year on year and 2% quarter on quarter, due to decreased volumetric sales caused by raw material supply shocks due to import restrictions and sluggish demand.
In 2QCY23, the company’s gross profit margin was 10%, up from 4% in the same quarter the prior year. The increase is due to various car price increases in 1HCY23. Other income was Rs774 million in 2QCY23, a 25% fall year on year due to a decrease in short-term investment related to a decrease in client advances.
PSMC earned Rs2.6 billion in finance income in 2QCY23, compared to Rs811 million in finance costs in the same period last year. This is due to exchange gains caused by the Japanese yen’s fall.
The country’s auto sector is particularly vulnerable to economic challenges, including difficulty in getting Letters of Credit (LCs) required for imports.
Aside from the LC issue, the sector is also dealing with reduced demand as a result of increasing pricing and record-high loan rates. A weakening rupee is also not helping.
According to figures from the Pakistan Automotive Manufacturers Association (PAMA), car sales fell by 57% year on year (YoY) in the first month of the fiscal year 2023-24.
In July, the registered car makers with PAMA sold a total of 5,092 cars. According to the data, the month-on-month (MoM) reduction was 16%.
