Pak Suzuki Motor Company Limited (PSMC) has announced its highest-ever loss after tax (LAT) of Rs. 12.91 billion in the first quarter that ended on March 31st, 2023 (1Q2023), the company had reported a loss of Rs. 460 million in the same period last year.
According to Topline Securities, this takes Pak Suzuki’s equity to around Rs. 7 billion in Q12023 as compared to Rs. 20 billion in Q42022.
The result came below industry expectations due to higher-than-expected finance cost. Finance cost which includes exchange loss, markup on late delivery, and demurrage and detention charges up 12x year on year and 3x quarter on quarter to Rs. 12.8 billion.
To recall, the company along with the last financial result informed that post-year-end rupee devaluation against US Dollar has resulted in an unrealized loss of Rs. 9 billion which will impact the 2023 financial results.
The net sales of the company decreased by 54 percent year-on-year (YoY) to Rs. 21.8 billion as compared to Rs. 47.7 billion last year amid subsequent price hikes and production slowdowns in the past few months.
According to the automaker’s financial results for 1Q2o23, the company posted a loss of Rs. 156 per share as compared to a loss per share of Rs. 5.59 per share last year.
The gross profit of the company increased by 47 percent YoY from Rs. 1.35 billion to Rs. 1.98 billion. Gross margins clocked in at 9.1 percent during the period in review, which is slightly lower than the previous quarter despite the hike in car prices.
Other income during 1Q2023 collapsed by 86 percent to Rs. 73.7 million as compared to Rs. 527.3 million due to a decline in the number of bookings.
PSMC’s scrip at the bourse closed at Rs. 99.64, down by Rs. 1.13 or 1.12 percent, with a turnover of 166,549 shares on Tuesday.
Intermittent production shutdowns since last year and the unavailability of completely knocked down (CKD) kits are one of the main reasons for the heavy losses incurred by PSMC during Q1. The majority of the automakers have blamed the State Bank of Pakistan’s (SBP) reluctance to approve letters of credit (LCs) for the clearance of imported goods, which has forced plants to close production.
January and February have been particularly unforgiving for Pakistan’s biggest carmaker by sales volume. As per the report from Pakistan Automotive Manufacturer’s Association (PAMA), Pak Suzuki sold fewer than 1,000 units in February.
This is the automaker’s worst performance yet since countrywide COVID-19 lockdowns in April 2020, which saw production and sales reach zero. Before that, Suzuki sold fewer than 3,000 units, which is the individual sales figure of a Suzuki Alto under normal circumstances.
To make matters worse, Suzuki also increased the prices of its cars by up to Rs. 1.2 million in Q1 2023. That, coupled with the intermittent production shutdowns, makes for a bleak future outlook for the company.