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Honda Pakistan’s Annual Profits Nosedive Due to High Car Prices

Honda Atlas Cars Limited (HCAR) posted a profit after tax of Rs. 260.14 million in the financial year ended March 31, 2023 (FY23), down 89.6 percent year-on-year (YoY) from a profit of Rs. 2.5 billion in the same period last year (SPLY), according to the notification filed by the car maker to the Pakistan Stock Exchange (PSX).

Along with the result, Honda Atlas Cars did not announce any cash dividend for the year.

For the quarter January-March (4QMY23), the company posted a loss of Rs. 5.8 per share as opposed to earnings of Rs. 5.7 per share in the previous quarter, according to Ismail Iqbal Securities. The deviation primarily stemmed from higher-than-estimated operating expenses, which could be a result of sizeable foreign exchange losses during the quarter.

The sales of the company during the year fell by 12 percent to Rs. 95.08 billion from Rs. 108.04 billion recorded in the corresponding period last year. In 4QMY23, the topline of the company arrived at Rs. 22.3 billion, declining by 3 percent on a quarter-on-quarter (QoQ) basis. Despite multiple price revisions during the quarter, the topline dipped as a result of a 6 percent decline in volumetric sales.

The company reported a gross profit of Rs. 7.16 billion, up by 29.4 percent as compared to Rs. 5.53 billion that was posted in the same period last year. The gross margin clocked in at 12.5 percent, the highest since 1QMY18 (14.2 percent).

In FY23, distribution and marketing costs decreased to Rs. 902.37 million as compared to Rs. 1.14 billion.

The other income of the company increased by 15.8 percent to Rs. 2.32 billion from Rs. 2 billion during the full year due. Meanwhile, it surged by 110 percent QoQ to Rs. 683 million during 4QMY23 owing to attractive deposit rates.

The finance cost of the company skyrocketed by a whopping 549.8 percent from Rs. 53.26 million to Rs. 346.14 million during the full year.

The company reported earnings per share (EPS) of Rs. 1.83 during FY23 compared to an EPS of Rs. 17.58 last year.

HCAR’s scrip at the bourse closed at Rs. 97.5, down 3.74 percent or Rs. 3.79 with a turnover of 128,577 shares on Friday.

Honda in Dire Straits

Honda Atlas Cars Limited (HACL) has had a terrible year in terms of production and sales. The company’s output was abysmal for two months due to supply chain issues as a result of import restrictions.

Last month, Honda, one of Pakistan’s biggest car companies by production and sales volume, sold just 207 cars. In that bunch, the sales of the Honda Civic, the company’s flagship sedan, were zero.

A recent notification states that the Honda will soon resume production soon. The automaker cited a “slight improvement in the accessibility of trade financing facilities” as the enabler of production restart.  Although, it does not mention the exact date of production resumption.

With the ongoing situation in the car market, Honda’s sales will likely remain lukewarm at best.

  • When All Your Cars will be above 50 Lacs, how can you expect that Buyers will Buy, In one Year the Dollar Price as you said increased 52%, but the price of your cars increased 62%-65%, You cant blame this on the Buyers, Your Company and others like you have made a monopoly since your inception, this was in-evitable. Your Greed has brought this upon you. Selling Rejected Models each Year In this Country in Name of New Model.

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