Honda Atlas Cars Reports a Massive Loss After a Long Time

Honda Atlas has announced its financial results for the 3rd quarter that ended on December 31st 2019.

The company has reported a loss of Rs. 41.25 million as compared to a profit of Rs. 601 million recorded in the same period last year. During the third quarter, the company sales were down by more than half as compared with the same period last year. The sales were down by 53.70% to Rs. 9.86 billion as compared with Rs. 21.29 billion recorded last year.

The major reasons behind the drop in profits ware the decrease in sales as the volumes sunk by 65.90% due to a rise in prices, rising finance cost by 171.7 times, low gross margins and low demand in the country. However, the Rupee/Dollar parity remained largely stable during the quarter (OCT-DEC).


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Furthermore, the country’s automobile sector is facing one of the worst slowdowns in decades, primarily from contracting demand due to poor customer sentiment. Low demand in recent months has forced the automobile companies in declaring frequent non-production days.

The company observed an astonishing 64 Non-Production days during the period:

MonthDays
October18
November23
December23
However, the cost of sales during the quarter was stated at Rs. 9.21 billion, down 53.15% against Rs. 19.66  billion due to low production, which took the gross profits to Rs. 646 million against Rs. 1.62 billion.

Units Sold in 3rd Quarter (OCT-DEC)
ModelsUnits Sold 2019-20Units Sold In 2018-19Difference
Civic and City2,9939,623  -68.90%
Honda BR-V6991,201  -41.80%
Total3,69210,824   -65.90%

 

Other income of the company also went down by 95.62% during the quarter to Rs. 10.16 million as compared to Rs. 232 million in the same period last year due to a drop in new car bookings and realization of short term
investments to manage liquidity position of the company. Other operating income was stated at Rs. 10.16 million, down by 95.62% as compared to Rs. 232 million.

Whereas the finance cost massively increased by 171.7 times to Rs. 322.84 million as compared to Rs. 1.88 million during the quarter under view. This was due to the working capital requirements, as the company resorted to bank financing and resultantly, the financial charges increased.

The company has reported a loss per share of Rs. 0.29  as compared with earnings per share of Rs. 4.21 in the previous quarter.

9 Month Result

All in, the company reported a nine-month profit to Rs. 710.15 million, down by 73.53% as compared to a profit of Rs. 2.68 billion last year.

The sales decreased by 44.50% to Rs. 39.39 billion during the nine months as compared to Rs. 70.96 billion in the same period last year.

However, the cost of sales of the company was Rs. 36.17 billion, down 44.80% against Rs. 65.54  billion due to low production, which took the gross profits to Rs. 3.21 billion against Rs. 5.42 billion.

The major reasons behind the drop in profits were the decrease in sales as the volumes which sunk by 55.13%, low margins and rupee devaluation, during the start of the financial year.

Overall, the finance cost of the company increased by 60.8 times to Rs. 577.28 million during the nine months as compared with Rs. 8.2 million recorded last year, which was due to working capital requirements, as the company opted for bank financing.

Earnings per share of the company was decreased to Rs. 4.97 from Rs. 18.78.  HCAR’s shares at the bourse closed at Rs. 199.78, down by 5.49% or Rs. 11.60 with a turnover of 414,700 shares on Thursday.


Units Sold in 9 months (March-December 2019)
ModelsUnits Sold 2019-20Units Sold In 2018-19Difference
Civic and City13,89932,520  -57.26%
Honda BR-V2,5934239  -38.83%
Total16,49236759   -55.13%



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