Honda Atlas cars has announced its financial results for the 1st quarter ended MY20 that ended on June 30th 2019.
The company posted a profit of just Rs. 241 million; down by 77% in profits as compared to Rs. 1.05 billion in the previous year due to the decrease in revenue as the company saw declining volumes. Moreover, Rupee’s depreciation against the US dollar created problems for the company.
The major reason behind the drop in profits was the decrease in sales as the volumes sunk down by 33% thanks to poor sales volumes despite 16% higher average selling prices in this quarter.
The sales of the company clocked in at Rs. 17.87 billion, which decreased by 25.05% as compared with Rs. 23.85 billion in the same period last year.
The cost of sales of the company was stated at Rs. 16.52 billion, down 24% against Rs. 21.71 billion which took the gross profits to Rs. 1.35 billion against Rs. 2. Billion. Moreover, the gross profits fell by 37% on account of persistent Rupee devaluation.
Similarly, margins contracted by 24bps QoQ/ 144bps YoY, owing to the surge in costs from devaluation.
Units Sold in 1st Quarter MY20 |
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| Models | Units Sold in 1stQMY20 | Units Sold In 1st QMY19 | Difference |
| Civic and City | 6980 | 10736 | Â -35% |
| Honda BR-V | 1366 | 1745 | -21.72% |
| Total | 8346 | 12481 | -33.13% |
The other major reasons were higher car prices owing to the devaluation impact, the 10% FED imposition on 1,700cc and above cars (i.e. Civic) and the imposition of Advance Customs Duty (ACD) i.e. 5% on all the imports
Moreover, the overall increase in car financing costs due to higher interest rates has led to a slowdown in demand for the company.
During this month, Honda had to shut down its plant for 10 days as its inventories piled up to 2,000 units on plummeting car sales amid rising prices due to the imposition of new, higher taxes in the budget and steep currency devaluation in the recent weeks.
The other income was down by 61% to Rs. 174 million with operating expenses increasing by 113.14% to Rs. 739 million as compared with Rs. 341 million.
The finance cost bulked up to Rs. 54.4million from Rs. 4.40 million due to an increase in interest rates of the country. However, Honda paid 86.27% less tax of Rs. 114 million as compared with Rs. 833 million in the same period last year.
Earnings per share of the company decreased from Rs. 7.36 to Rs. 1.69.
Honda’s script at the bourse closed at Rs. 131.06, up by Rs. 3.31 or +2.59% with a turnover of 390,700 shares on Tuesday.
The country is facing an overall economic slowdown with Rupee devaluation. The competition for the company looks to be increasing day by day as the sector is welcoming new auto players. Honda’s future lies with the demand from the consumers and economic fundamentals, which don’t look that good at the moment.
Good… Its about time, they start launching new models atleast at par with other countries… All we get in Pakistan is Uplifts, pathetic strategy by Honda and Toyota.
PTI govt. destroy whole Auto industry. Auto sector paid 200 Billion rupees taxes in a year.
Start selling your cars on real prices and get profitable again. These thinking of earning huge profits from each car will lead towards bankruptcy
Who told you that they are earning huge profit ?????
Just implement the Wallmart policy, they make huge sales with less profit margin.
They made sales of $960 Billion & earned just $16 Billion in one year.
I know lot of people will say Supermarket chain cannot be compared with Auto manufacturers but atleast sales with less profit margin can be achieved…
Man , their margin in each car is average 50k. Real issue is current devaluation. Currency devolution destroy the whole economy.
Wonderful news. They should learn lesson.
Great news. This should teach them a lesson. They should improve quality of their products. Give us features that international models have. They didn’t even bother introducing new model of city cuz old one was still selling well. Hope new companies come and break their monopoly.
InshaAllah they will start selling their cars on khoti reri.
There will be further compromise in quality. Honda/ toyota/ Suzuki products are already terrible compared to same models they are giving to other countries in less price. It’s about time they suffer a little as we did while buying their cars.
Another feather in the cap of Nalaiq Selected government. And look at all these experts here, getting overjoyed over declining sales and profits of a large tax paying company. Do they even have an idea what impact it will have on tax revenues of the government and the lives of 1000s of families associated with such large companies.
Honda cars assembled in Pakistan under auspices of Honda Japan, and fully adhere to Honda Japanese standards. The only viable option left Honda Pakistan to export to international markets where Honda is a popular brand appeal to a large community. As the car is in conformity to the UN/WHO Road Safety Standards likely they’d be awarded huge orders. The Takata Japanese Airbag scam necessiates Honda to comply with the Japanese standards and should buy the cars for Japanese fans of Honda Civi, City fans, geriatrics,old and wealthypeople olook at thismodel. With best wishes.