Urbanisation driving Atlas sales

In line with the marginal, one percent increase in two-wheeler sales; Atlas Honda posted a 1.6 percent growth in sales during FY14.
According to the recently-released numbers by the company, net revenues increased by 5.1 during FY14. The increase was attributed to volume growth, optimum sales mix, Yen's depreciation against dollar and cost control mechanisms undertaken by the company. Profitability of Atlas has increased by 24.4 percent year on year, registering earnings of Rs2 billion.
More importantly, the company, which has historically remained the market leader in two-wheeler, has been able to further increase its market share during the year, which rose to 87.5 percent from 81.5 percent during FY13. During the last quarter of the year, market share of Atlas rose further higher, reaching almost 90 percent. Atlas is followed by DYL Motors in the market which currently holds a share of almost eight percent.
During November last year, Atlas had also launched the new Pridor model with an engine capacity of 100cc, targeting sales of up to 40,000 units. During the same month, the company also launched the next-generation CD Dream, considering that the two-wheeler market in Pakistan is largely dominated by the 70cc segment. Further, to mark its 50 years of operations, the company added a sporty top model to its product portfolio, the CBR series in 150cc and 500cc categories.
While demand for two-wheeler has boosted the spare parts revenue for the company, there are also apprehensions of low-quality, smuggled and counterfeit parts taking over the market. Sales parts revenue also registered positive growth and posted Rs3.2 billion in revenues on account of progressive marketing, new packaging and accessibility to genuine parts through increased product range, B2B installation at dealers shops and improvement in delivery system.
Demand for two-wheeler was higher in urban centres on account of increased urbanisation and higher fuel prices, while demand in rural areas remained muted. The company anticipates that with the rise in population, there could be a demand stimulus for two-wheeler.
The shifting of two-wheeler demand from rural to urban areas is also indicative of the lack of mass transit of transport infrastructure in the latter, an area where Federal and Provincial Governments are now trying to catch up.

================================================

Atlas Honda Key Financials

================================================

Rs (mn)                         FY14        FY13

================================================

Sales                          44479       42325

Cost of sales                 -40254      -38646

Gross profit                    4225        3679

Sales & marketing expenses     -1294       -1207

Administrative expenses         -430        -387

Other income                     421         323

Other expenses                  -224        -190

Profit from operations          2697        2217

Profit before taxation          2689        2208

Taxation                        -688        -600

Profit after taxation           2002        1608

EPS (Rs)                       19.36       15.56

================================================