Pak Suzuki Motor declares Rs2.68 billion annual profit

Pak Suzuki Motor declares Rs2.68 billion annual profit

KARACHI: Pak Suzuki Motor Company Limited (PSMC) on Tuesday announced net profit of Rs2.68 billion for the year ended December 31, 2021.

The company had declared a loss of Rs1.38 billion during the previous year, according to financial statement shared with the Pakistan Stock Exchange (PSX).

Analysts at Arif Habib Limited attributed the massive surge in profit to improved volumetric sales which is 108 per cent year on year (YoY), increased car prices, higher other income as well as reduction in financial charges, given significant decline in borrowings.

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Alongside the result, the company also announced a final cash dividend of Rs6.50/share.

The highlights of the financial results of PSMC revealed that during the fourth quarter (October – December) 2021 the net sales surged by 64 per cent YoY to Rs43.71 billion owing to significant jump in sales volume, which is 68 per cent year on year, together with upward revision in prices. This took financial year 2021’s topline to Rs160.08 billion up by 109 per cent YoY.

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During the fourth quarter, the gross margins declined to 3.55 per cent as compared to 9.28 per cent or decline of 573 basis points in same period last year (SPLY) amid higher cost pressures emanating from substantial currency devaluation, around 4 to 5 times jump in freight costs, coupled with elevated input costs (mainly steel).

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The same reasons kept the margins lower as compared to the last quarter or decline by 175 basis points. Together with this, swift’s production decline, mainly to pave way for the product’s new model, contributed further towards the suppressed margins on a quarter on quarter (QoQ) basis. This took calendar year 2021’s margins to 5.1 per cent compared to last year’s margins of 4.69 per cent, as augmented topline offset the impact of rising cost pressures.

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During the quarter, other income increased by 142 per cent YoY and 121 per cent QoQ to Rs933 million on the back of increased advances from customers, which generated higher interest income for the company. Similar trend was witnessed in calendar year ended December 31, 2021.

During the year under review, the company booked effective taxation at 29 per cent.

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