KARACHI 24th July: Earnings of Honda Atlas Cars took a massive hit in the quarter ended June 2019 as profits dived 77% on the back of declining revenues.
The company reported after-tax profit of Rs241.7 million in the quarter ended June 30, 2019 compared to Rs1.05 billion in the same period of previous year, according to a notice sent to the Pakistan Stock Exchange (PSX).
Earnings per share dipped to Rs1.69 in the period under review from Rs7.36 in the previous year.
“The significant decline in earnings was mainly due to a massive 25% year-on-year reduction in revenue,” said Topline Securities’ analyst Hammad Akram. He said the revenues were down as volumetric sales of the company dropped 33% year-on-year. Sales were recorded at Rs17.9 billion in the quarter ended June 2019 compared to Rs23.9 billion in the previous year.
The number of units sold during the quarter came in at 8,346 compared to 12,481 units in the same period of last year.
Over the past quarters, Honda Atlas Cars had hiked prices of different variants in the range of 8-23% due to significant rupee depreciation, 5% advance customs duty on raw material and imposition of federal excise duty, Akram added. Other income plunged 67% to Rs174.9 million due to low income from bank deposits as the company reduced cash balance in its accounts after decline in advance payments from customers.
Meanwhile, operating expenses jumped to Rs739.8 million due to the exchange loss recorded by the company, the analyst said. Finance cost surged to Rs54.4 million from Rs4.4 million in the period under review.
According to Arif Habib Limited, the jump in finance cost in the quarter under review might be an indication of the company resorting to short-term borrowing in the face of declining advances due to low demand.