Atlas Honda Records a 31% Drop in Profits in FY2018-19

Atlas Honda Limited, one of the leading bike manufacturers in Pakistan, has announced its financial results for the year which ended on March 31st 2019. The motorcycle maker posted a profit of Rs 3.20 billion, showing a decline in profits by 31.20% as compared to a profit of Rs 4.66 billion last year.

The CD-70 maker posted a 7% growth in nets sales, reported at Rs 82.41 billion against Rs 77.47 billion in the previous year. The cost of sales of the company grew by 9.64% to Rs 75.85 billion as compared with Rs 69.18 billion which took the gross profit down by 21% to Rs 6.55 billion against Rs 8.29 billion in the corresponding period of the previous year.

With multiple price hikes during the year, the company showed a decline in profits likely due to the cost of sales as the depreciation of rupee against the US dollar increased cost of production parts and materials. Since steel is a major input in auto manufacturing, it is imported and its costs are sensitive to steel price volatility.

Moreover, the share of net profit of an Associate fell by 69%, which further dragged down the net earnings. The finance cost saw a minimal increase of 13.61% to Rs 25.81 million as it has been debt-free for seven years now and any finance costs it incurs are bank charges on transaction costs paid to banks for collections from customers.

The company sold over 1,135,869 units showing a growth of 4.50% as compared with 1,087,105 units last year. CD-70 motorcycle, which is the highest selling model for ATLH, has faced tough competition from Chinese rivals in the market.

Urban demand is pushing sales for higher engines in the 125cc category. The company recently introduced CB 125F and CG 125 to rival other market players and to meet the rising demand in this category.

Yamaha was the first to launch its sporty 125cc bike in Pakistan. Later, Atlas Honda decided to enter the market segment as well.

Earnings per share of the company were stated at Rs. 31.03 against Rs 45.10. The company also announced a final Cash Dividend of Rs. 10 per share, i.e. 100% and a bonus issue of 20%.

In May last year, the motorcycle manufacturer announced plans to enhance its production capacity to 1.5 million units.

The country’s economic situation remained fragile and slow. Concerns on the economic front continued to persist on the back of rising inflation and overall economic slowdown. Increase in sales of motorcycles has a direct relationship with population and GDP growth.

Atlas Honda Limited’s share price closed at Rs 396.18, up by Rs 7.74 with a turnover of 5,100 shares on Wednesday.

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