KARACHI: Pak Suzuki Motor Company Limited, the country’s largest car assembler, reported a net loss of Rs9.68 billion for the first half of 2023, as its sales plunged due to import restrictions and weak demand.

In a statement to the Pakistan Stock Exchange, the company reported a net loss of Rs9.676 billion for the half-year ended June 30, up from a loss of Rs17.238 million the previous year. The company also skipped a dividend for this period.

Loss per share came in at Rs117.58, compared with a loss per share (LPS) of Re0.21 during the same period last year.

The company said its revenue for the year dropped to Rs43.182 billion, compared with Rs112.624 billion a year earlier. However, the cost of sales remained at Rs39.037 billion from Rs108.415 billion during the same period last year. Finance costs rose to Rs10.141 billion against Rs1.842 billion last year, which increased losses.

For the quarter ended June 30, the company announced a profit of Rs3.238 billion, compared with Rs442.989 million during the same quarter last year. Earnings per share for the quarter came at Rs39.36 compared with earnings per share (EPS) of Rs5.38 last year.

The drop in sales comes as the company remained non-operational through much of the said period, as it faced inventory shortages.

Analysts said the second quarter result came above street consensus because of the higher gross margin on the back of multiple car price hikes during the period and finance income of Rs2.6 billion, driven by the exchange gains on account of the decline in JPY/PKR parity.

The company posted revenue of Rs21.3 billion, down by 67 percent year-on-year and 2 percent quarter-on-quarter because of lower volumetric sales on the back of raw material supply shocks due to import restrictions and weak demand.

The company posted a gross profit margin of 10 percent in 2QCY23 as opposed to 4 percent in the same period last year. The surge is attributed to multiple car price hikes in 1HCY23. The company recorded other income of Rs774 million in 2QCY23, down 25 percent year-on-year because of a decrease in short-term investment due to a decline in advances from customers.

PSMC recorded a finance income of Rs2.6 billion in 2QCY23 as opposed to the finance cost of Rs811 million in the same period last year. This is attributed to exchange gains driven by depreciation of Japanese yen.

The country's auto sector is especially facing economic headwinds, including the sector's inability to secure Letters of Credit (LCs) needed for imports.

In addition to the LC issue, the sector is also faced with depressed demand due to higher prices and record-high interest rates. A falling rupee is not helping either.

Car sales dropped by a whopping 57 percent year-on-year (YoY) in the first month of the fiscal year 2023-24, as per data given by Pakistan Automotive Manufacturers Association (PAMA).

The registered car manufacturers with PAMA cumulatively sold only 5,092 units in the month of July. The month-on-month (MoM) decrease stood at 16 percent, as per the data.

Source: The News