Honda Atlas Cars Pakistan Ltd (HCAR) announced a 29.10 percent decrease in its profits.
The car assembler has reported a profit of Rs. 658.20 million in the first quarter that ended on 30 June 2022 as compared to a profit of Rs. 928.22 million that was recorded in the same period last year.
The results are still above the industry expectations due to lower-than-expected taxation and higher-than-expected gross margins.
However, the sales during the first quarter were up by 39 percent to Rs. 30.24 billion as compared to Rs. 21.76 billion was recorded in the corresponding period last year.
The revenues were up due to 24 percent YoY growth in volumetric sales and multiple price increases.
The company reported a gross profit of Rs. 1.91 billion up by 20.13 percent as compared to Rs. 1.59 million that was posted in the same period last year.
Gross margins were recorded at 6.3 percent during 1QMY23 vs 7.3 percent in the same period last year. This is due to the exorbitant rise in raw material costs emanating from PKR devaluation. Despite multiple price increases, Honda was unable to pass on the full impact to customers.
The distribution and marketing expenses had increased by 83.4 percent to Rs. 242 million as compared to Rs. 132 million. Other expenses of the company were increased by 295 percent to Rs. 753 million from Rs. 191 million during the period.
The other income of the company was increased to Rs. 526 million, up by 57 percent as compared to Rs. 335.26 million due to the increase in the new car bookings.
The company reported earnings per share of Rs. 4.61 as compared to a loss per share of Rs. 6.50.
HCAR’s scrip at the bourse was closed at Rs. 157.71, down by Rs. 0.70 or 0.44 percent, with a turnover of 44,782 shares on Tuesday.
Market Situation
HCAR has been observing strong sales every month since January 2022, which is mainly due to the success of 6th generation Honda City. In June, City became the best-selling sedan in June 2022, beating the likes of Toyota Corolla, Yaris, Suzuki Swift, and Changan Alsvin in the Process.
However, much like the entire local automobile sector, HCAR is struggling to keep up with the demand due to crippling depreciation of the local currency, tax rate hikes, and an increase in operational costs.
As per a recent report, the company has trimmed its production volume by moving to single-shift operations due to the aforementioned challenges.
Curiosity is at an all-time high regarding the car market’s fate as the current economic instability creates a foreboding sense among all stakeholders including the general public.
