Pak Suzuki Motor Company Limited (PSX: PSMC) has announced a profit after tax of Rs. 3.2 billion for the quarter that ended on June 30, 2023, up 631 percent from Rs. 443 million last year.
According to Ismail Iqbal Securities, the basis of the profitability was higher than estimated gross margin and sizeable finance income during the quarter.
Meanwhile, PSMC posted a loss after tax of Rs. 9.67 billion for the half-year that ended on June 30, compared to a LAT of Rs. 17.2 million in 1HCY22. Estimates suggest 1HCY23 losses are mainly attributed to massive finance costs amounting to Rs. 10.1 billion, 450 percent higher than finance costs of Rs. 1.8 billion reported in the same period last year and lower sales.
In 2QCY23, the sales of the company arrived at Rs. 21.3 billion, declining by a meager 2 percent QoQ despite a 22 percent QoQ decline in volumetric sales (7,441 units; one of the lowest in the company’s history) possibly on the back of realization of price hikes in the last quarter.
As a result, gross margin inched up by ~1 ppt QoQ to 10 percent.
While the sales also declined by 67 percent year on year from Rs. 64.88 billion to Rs. 21.43 billion in the quarter under view.
Meanwhile, the sales decreased by 61.6 percent to Rs. 43.1 billion in H1 2023 compared to Rs. 112.6 billion reported in the same period of the previous year.
Gross margins clocked in at 9.5 percent during 1HCY23 compared to 3.7 percent recorded in SPLY. The gross profits of the company decreased to Rs. 4.1 billion from Rs. 4.2 billion in SPLY.
Other income fell by 46 percent YoY to Rs. 847 million as compared to Rs. 1.56 billion in 1HCY22.
In Q2, other income jumped by ~10x QoQ to Rs. 774 million. Finance cost which has been the chief reason for severely exacerbating the bottom-line of the company in the last three quarters has vanished this quarter and instead, the company has earned a sizeable finance income of Rs. 2.7 billion in 2QCY23, beyond industry expectations.
The company has booked a taxation of Rs. 1.54 billion in 1HCY23 compared to Rs. 767 million in 1HCY22.
At the time of filing, PSMC’s scrip at the bourse was Rs. 106.33, down by Rs. 2.77 or 2.54 percent, with a turnover of 69,980 shares on Friday.
The ongoing economic crisis has, once again, put PSMC is once more in a difficult situation. The lack of inventory has prompted the company to suspend the motorcycle assembly plant until August 31.
The official notification stated that the motorcycle assembly had been suspended from August 18 to August 31. With the dollar rate in a topsy-tervy state once again, Suzuki may increase the bike prices following the resumption of production.