Despite the Coronavirus pandemic, the Atlas Honda Limited (AHL) the Profit after Tax (PAT) for the second quarter ended September 30, 2020, stood at Rs. 1.03 billion as compared to Rs. 570 million in the same period last year, showing a growth of 76 percent.
During the second quarter, the company achieved net sales of Rs. 24.4 billion, an increase of 32pc as compared to last year. An increase in sales volume coupled with continuous cost reduction measures has led the gross profit to grow over Rs. 1.9 billion as compared to Rs 1.3billion in the same period last year, an impressive increase of 45pc.
Sales, marketing, and general administrative expenses remained more or less at the same level as last year due to measures introduced for cost efficiencies. Other income nets of financial charges & other operating expenses contributed Rs. 190 million to the bottom line.
As a result, the Company registered a net profit before tax of Rs. 1.42 billion during the second quarter. Net profit after tax rose to Rs. 1 billion representing an increase of 76pc. This translated into Earnings per Share (EPS) of Rs. 8.1 as against Rs. 4.6 of last year.
During the half-year ended September 30, 2020, the Company achieved net sales of Rs. 33.6 billion, a decrease of 19pc as compared to last year. This was due to low sales volume on account of country-wide lockdown during most of the first quarter.
Accordingly, gross profit declined from Rs. 3.02 billion to Rs. 1.98 billion, down by 34pc. Sales and marketing expenses registered a decrease of 24pc due to cancellation of discretionary expenses.
Administrative expenses rose slightly by 3pc due to the effect of inflation. Other income, net of other operating expense and finance charges, contributed an encouraging Rs. 431 million to the bottom line, 16pc higher than the comparative period.
Resultantly, the company achieved a profit after tax of Rs. 886 million, representing a decrease of 37pc. This translated into Earnings per Share (EPS) of Rs. 7.1 against Rs. 11.4 for the corresponding period of last year.
The main risk to the outlook is the threat of a second wave or a prolonged pandemic, especially during the upcoming winter season. A return to more stringent containment measures could derail the economic recovery.
Moreover, the country is at the brink of stagflation with rising inflation amidst modest growth. This situation calls for the development of time-sensitive plans to observe the demand-supply scenario and devise an effective mechanism.
Atlas Honda stated that it is successfully navigating through uncertain times with a focus on the safety and well-being of everyone while ensuring business continuity. The Company is well-poised and has demonstrated its ability to avail and execute emerging opportunities and strategies, respectively, with an aim to keep building long term business proposition and increasing stakeholders’ value.