Honda Profits Jump Due to Strong City, Civic Sales

Honda Atlas Cars Pakistan Limited (HACPL), an automobile subsidiary of Honda, announced its result for the year that ended on 31st March 2018. The company posted a net profit of Rs 6.49 billion which is up by 5.87% as compared to Rs 6.13 billion in the same period previous year due to volumetric increase in sales by 42%.

Earnings per share (EPS) increased to Rs 45.48 from an EPS of Rs 42.96 in the period under review.\

Along with the results, the company also announced a final cash dividend of Rs 22.75 per share i.e. 227.5% which was higher than analyst expectations.


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The company saw an increase of 45.73% in revenues to Rs 91.52 billion from Rs 62.80 billion last year thanks to the overall volumetric sales and introduction of BR-V SUV. Gross Profit grew by 14.5% year-on-year (YoY) to Rs 10.49 billion.

Models Units (FY Ended March 18) Units (FY Ended March 17) Difference
Honda Car (Civic & City) 40,958 35,304 16.02%
Honda Car BR-V 9,098
Total sales 50,056 35,304 41.79%

The popularity of Honda Civic and sales of Honda City also contributed to the company’s outstanding performance in sales. Both models maintained good momentum and gained positive feedback as one of the most popular cars from Honda. Furthermore, Honda BR-V, the first locally produced 7-seater SUV which was introduced in early 2017, marked impressive sales with 9,098 units sold.

The company witnessed margin attrition because Pakistani Rupee weakened by 8% YoY against the USD during 4QFY18, whereas THB and JPY have appreciated by 10% YoY and 6% YoY against the USD respectively. Gross margins in this period fell by 3.11pps YoY.

Key Financials March 2018 March 2017 % Change
Amounts in PKR’ 000
Sales 91,522,872 62,802,753 45.73%
Cost of Sales 81,073,777 53,681,061 51.03%
Gross Profit 10,449,095 9,121,692 14.55%
Distribution and Marketing Costs 916,906 542,321 69.07%
Administrative Expenses 677,602 497,269 36.26%
Other Operating Income 1,883,025 1,115,189 68.85%
Other Operating Expenses 1,244,569 537,523 131.54%
Profit from Operations 9,493,043 8,659,768 9.62%
Finance Cost 14,476 23,443 -38.25%
Profit before Taxation 9,478,567 8,636,325 9.75%
Taxation 2,984,117 2,501,335 19.30%
Profit after Taxation 6,494,450 6,134,990 5.86%
EPS – Basic and diluted 45.48 42.96 5.87%

Owing to the recent currency devaluation, Honda also increased its car prices in January (4Q). Prices for every Honda car except the Turbo Civic and the BR-V were increased. The Turbo Civic was discontinued but it is expected that it will get a price hike when Honda decides to restart sales for the model. The prices were increased twice in four months.

The significant increase in the cost of raw material, arising from adverse currency exchange rate movement was not entirely passed on to the consumers during the year, as a price increase of only 3% was witnessed which caused the gross margins to decline.

Other operating expenses of the company increased by a massive 131% from last year.

HCAR’s share at the bourse was trading at Rs 434, down by 1.44% with a turnover of 86,900 shares.

Honda operates through two joint ventures in Pakistan’s automobile industry, both with the Atlas Group, a financial and industrial conglomerate in Pakistan. Honda owns a stake in Honda Atlas Cars, a car assembler, and in Atlas Honda, the largest motorcycle producer in Pakistan with over 50% market share.