Pak Suzuki Motor Company Limited (PSX: PSMC) reported a profit after tax of Rs. 3.2 billion for the fiscal quarter ending June 30, 2023, up 631 percent from Rs. 443 million the previous year.
Pak Suzuki Motor
According to Ismail Iqbal Securities, the profitability was based on a higher-than-expected gross margin and a sizable finance income throughout the quarter.
PSMC, on the other hand, reported a loss after tax of Rs. 9.67 billion for the half-year ended June 30, compared to a LAT of Rs. 17.2 million in 1HCY22.
Finance charges of Rs. 10.1 billion
According to estimates, 1HCY23 losses are mostly due to significant finance charges of Rs. 10.1 billion, which are 450 percent greater than finance costs of Rs. 1.8 billion reported in the same period last year, as well as fewer sales.
In 2QCY23, the company’s sales were Rs. 21.3 billion, a 2 percent QoQ reduction despite a 22 percent QoQ decline in volumetric sales (7,441 units; one of the lowest in the company’s history), likely due to the realisation of price hikes in the previous quarter.
As a result, gross margin increased by 1 percentage point year on year to 10%. While revenues fell by 67 percent year on year, from Rs. 64.88 billion to Rs. 21.43 billion in the current quarter.
43.1 billion in H1 2023
Meanwhile, revenues fell by 61.6 percent to Rs. 43.1 billion in H1 2023, from Rs. 112.6 billion in the same period the previous year.
Gross margins were 9.5 percent during 1HCY23, compared to 3.7 percent in SPLY. The company’s gross earnings fell to Rs. 4.1 billion from Rs. 4.2 billion in SPLY.
Other income decreased by 46% year on year at Rs. 847 million, compared to Rs. 1.56 billion in 1HCY22. Other income increased by tenfold year on year in Q2 to Rs. 774 million.
Firm’s bottom-line
Finance cost, which had been the primary reason for the firm’s bottom-line deterioration in the previous three quarters, has evaporated this quarter, and the company has earned a sizable finance income of Rs. 2.7 billion in 2QCY23, exceeding industry forecasts.
In 1HCY23, the company had a taxes of Rs. 1.54 billion, compared to Rs. 767 million in 1HCY22.
PSMC’s stock was trading at Rs. 106.33 at the time of reporting, down Rs. 2.77 or 2.54 percent, with a turnover of 69,980 shares on Friday.
The current economic crisis has once again placed PSMC in a tough position. Due to a lack of inventory, the firm has decided to close the motorbike assembly plant until August 31.
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