Profit at Indus Motor drops by 75%.
At Rs37.2 billion in the first quarter of FY23, net sales decreased.
The Indus Motor Company (INDU) reported that its net income for the first quarter ended September 2022 decreased significantly by 75%.
The vehicle maker reported a profit after tax (PAT) of only Rs1.3 billion, which is pitifully low compared to Rs5.4 billion in the equivalent quarter of 2021, according to the financial results released on Thursday. Earnings per share (EPS) for the reviewed quarter were Rs16.5 as compared to Rs69.0 during the same period prior year.
“The results are worse than the industry predicted; a substantial variance came from gross loss,” said Asad Ali, an auto analyst with Insight Securities.
According to him, earnings climbed by 76% on a sequential basis because there was no extra tax of 10%. He also noted that the company’s effective tax rate in the fourth quarter of the fiscal year (FY) 2022 was 88%, which hurt the bottom line.
The auto analyst at Ismail Iqbal Securities, Muhammad Saad Imran, noted that “the company has also issued an interim cash dividend of Rs8.2 per share along with the result.”
“Net sales for INDU decreased to Rs37.2 billion during the first quarter of FY23, down by 43% year-over-year, due to reduced volumetric sales by 52% year-over-year, amid higher car costs and lower output,” said Sunny Kumar, Deputy Head of Research at Topline Securities.
The abrupt movement of the Pakistani rupee against the US dollar and the ban on the import of completely built units (CBU) have led to lower trading margins and volumetric sales, which have led to lower fixed cost absorption, according to Ali. “The company recorded gross loss of Rs2.3 billion in the first quarter of FY23,” he noted. According to him, the first quarter of FY23 saw “the automobile maker’s revenues decrease by 43% year over year and 48% quarter over quarter, mostly due to a decline in volumetric sales amid supply restrictions.”
