Discounting income from SIDC settlement and higher vehicle sales drive strong earnings growth in the first quarter.
Honda Atlas Cars Pakistan has disclosed the key factors behind its nearly 200 percent increase in profit during the first quarter of FY2026-27, ended June 30, 2026.
The automaker reported a profit after tax of Rs2.49 billion, significantly higher than the Rs828 million recorded during the corresponding period of the previous year.
According to the company, the sharp rise in profitability was largely supported by a substantial increase in other income, which reached Rs2.09 billion during the quarter. In comparison, other income stood at Rs553 million in the same period last year, reflecting a remarkable year-on-year increase.
The company explained that the major contribution to this growth came from the settlement of its outstanding Sindh Excise Infrastructure Development Cess (SIDC) liability.
During the quarter, Honda Atlas entered into a settlement agreement with the Government of Sindh regarding an outstanding SIDC obligation totaling Rs4.85 billion.
Under the terms of the agreement, the company is required to pay Rs2.18 billion, representing 45 percent of the total liability, by July 2027.
The remaining Rs2.67 billion, equivalent to 55 percent of the liability, will be paid through 48 quarterly installments over an extended period.
Honda Atlas stated that the long-term payable portion of the SIDC liability was measured at its present value by discounting future cash flows using an effective discount rate of 11.5 percent per annum, which aligns with the prevailing policy rate.
As a result, the company recognized discounting income of approximately Rs1.59 billion. This amount represents the difference between the nominal liability and its present value and was recorded under other income in the profit and loss statement.
Apart from the one-time accounting gain, Honda Atlas also reported strong growth in its core business operations.
Net sales for the first quarter increased to Rs37.2 billion, compared with Rs26.46 billion in the corresponding period of the previous year, indicating robust demand for the company’s vehicles.
The automaker’s gross profit improved to Rs2.87 billion from Rs2.27 billion a year earlier. Meanwhile, earnings per share (EPS) surged to Rs17.41, compared with Rs5.80 in the same quarter last year, reflecting the company’s significantly improved financial performance and stronger profitability.