Pak Suzuki Motor Company Limited (PSMC) has announced a loss after tax of Rs. 2.48 billion for the third quarter that ended on September 30, calendar year (CY) 2022.
The company had reported a profit of Rs. 993 million in the same period last year. This took the nine-month results to a loss of Rs. 2.50 billion in 2022.
The result is above industry estimates primarily on the back of a massive increase in finance costs.
The net sales of the company shrunk by 41 percent to Rs. 29.80 billion as compared to Rs. 50.26 billion mainly due to lower volumetric sales and a slowdown in demand on account of the high cost of financing and higher car prices according to Arif Habib Ltd.
According to the automaker’s financial results for 3QCY22, the company posted a loss of Rs. 30.25 per share as compared to earnings per share of Rs. 12.07 per share last year.
Gross margins clocked in at 5.2 percent during the 3QCY22, stagnant over last year as higher car prices and a significant reduction in steel prices offset the impact of volumetric decline and PKR depreciation.
The gross profits of the company decreased by 41 percent to Rs. 1.56 billion from Rs. 2.66 billion in the same period last year.
Other income remained rose to Rs. 1.065 billion as compared to Rs. 423 million due to higher interest income on cash and cash equivalents.
Finance cost surged to Rs. 4.79 billion up by massively 62 times YoY as compared to Rs. 76 million reported in the same period last year which projections suggest could be a result of higher than estimated exchange losses and markup on late deliveries, according to a report by Ismail Iqbal Securities.
Lastly, the company has booked a tax reversal of Rs. 976 million compared to an advancement of Rs. 405 million in the same quarter last year.
PSMC’s scrip at the bourse was closed at Rs. 160.87, down by Rs. 6.75 or 4.03 percent, with a turnover of 137,170 shares on Wednesday.
PSMC has announced a production suspension for three days in October 2022. It made the announcement at Pakistan Stock Exchange (PSX) on Tuesday, notifying three more non-production days (NPDs).
PSMC blames the State Bank of Pakistan’s new mechanism that requires CKD import approval beforehand. It states that the mechanism has slowed down CKD kit imports, causing the inventory to run out.
Last month, PSMC observed 12 NPDs while Toyota Indus Motor Company (IMC) saw 14 NPDs. Likewise, Hyundai Nishat and Honda Atlas also paused production due to the inventory shortfall.
The production cuts and sluggish sales have become a problem for carmakers as they fear further drop in revenues.
