Indus Motor Company reports profit of Rs3.22bn for Jan-Mar, 37% lower YoY

Indus Motor Company (IMC), the assembler of Toyota vehicles in Pakistan, reported on Wednesday a profit-after-tax (PAT) of Rs3.216 billion for the third quarter of financial year 2022-23, a decrease of 37% as compared with earnings of Rs5.118 billion in the same period of the previous year.

Earnings per share (EPS) stood at Rs40.92 compared with Rs65.11. The board of directors met on April 20 to review the company’s financial and operational performance in the first nine months ended March 31, 2023.

Along with the result, the company declared an interim cash dividend of Rs24.4 per share. This is in addition to the already paid interim cash dividend of Rs18.4 per share.

On a quarterly basis, the PAT of Indus Motor was up by 142%.

“The increase in profit on a sequential basis can be attributed to an improvement in gross margins (+730bps QoQ), which resulted in an operating profit after two consecutive quarterly operating losses during FY23,” said Arif Habib Limited (AHL) in a note.

“On a QoQ basis the gross margins of Indus Motor has improved to 6.3%. This was not expected,” Muhammad Abrar, an investment analyst at AHL, told Business Recorder.

The analyst said IMC was able to wane off the impact of currency devaluation after it managed to increase the prices of its cars significantly.

“Higher profits are expected in the upcoming quarter as well, on account of increase in car prices, whereas, the company has also managed to curtail its operating expenses,” added the analyst.

Revenue of the automaker decreased by 29% from Rs68.22 billion last year to Rs48.12 billion in Jan-Mar 2023. The decline was attributed to “lower units sold as company recorded sales of 7,285 units in 3QFY23 compared to 18,495 units in 3QFY22,” said Topline Securities.

IMC witnessed a gross profit of Rs3.05 billion during 3QFY23 in comparison to a gross profit of Rs5.23 billion in the same period of last year.

The automaker’s other income portrayed a decline of 5% from Rs3.18 billion last year to Rs3.04 billion in 3QFY23. This was “mainly due to a decline in short-term investments, resulting in lower interest income,” said AHL.

Auto sector woes

The country’s auto sector, hugely dependent on imports, have been hit hard by the government’s decision to curb imports and restrict issuance of Letters of Credit (LC). Additionally, higher finance cost and massive increase in car prices have also reduced demand from consumers.

Pakistan’s auto industry reported car sales of 9,211 units in March, 62% higher on a month-on-month basis but still 66% lower compared to the number in March 2022, according to data shared by Pakistan Automotive Manufacturers Association (PAMA).

Last week, Pak Suzuki Motor Company Limited (PSMC) recorded its highest-ever quarterly loss of Rs12.9 billion in the first three months of 2023 owing to decrease in sales and high finance cost.