Pak Suzuki Motor Company posted a net profit of Rs 1.39 billion for the nine months that ended September 2018, down by a massive 55.04 % year-on-year as compared to Rs 3.09 billion in the same period last year.
Earnings per share for the nine months came down to Rs 16.92 from Rs 37.63. Whereas in the 3rdquarter, the company reported a profit after tax of just Rs 95 million, as the profits nosedived by 1124% as compared to Rs 1.15 billion in the same period last year.
Earnings per share for the quarter came down to Rs 1.15 from Rs 13.43.
The increased expenses, as well as taxation, were higher. Effective tax rate came in at 79% due to the applicability of turnover tax as opposed to tax on profits.
During the Q32018, the sales of the company grew 2.5% YoY to reach Rs 26.6 billion during Q32018 despite 7.20% YoY volumetric decline in sales(including 2 wheelers) due to price hikes.
3rd Quarter 2018 Volumes
However, gross profits shrank by 353 basis points YoY mainly as a result of rupee depreciation of 20% compared to last year, with a higher cost of steel prices and rise in commodity prices, which led to a 34% YoY drop in gross profitability.
Despite multiple price increases, the company’s cost of sales rose by 7% YoY to Rs 24.93 billion. Administrative costs also rose by 67% to Rs 644 million in the 3rd quarter.
Moreover, other income dropped 59% YoY which was on account of lower bank deposits in the current quarter.
PSMC’s shares at the Pakistan Stock Exchange closed at Rs 225.60, down by Rs11.87 (-5%) with a turnover of 0.05 million shares traded.
The coming months do not look good to the experts from an earnings perspective because of the exchange rate, as the rupee depreciated against the US$ in Oct-2018 and while the other two other competitors have increased their prices, PSMC has still not raised prices and if they do so, volumes could face an even more significant setback.