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Financial results: Despite speed bumps, Honda announces profits


Financial results: Despite speed bumps, Honda announces profits

By Our Correspondent
Published: November 27, 2013
The company sold about 12,783 units during the period against the sales of 8,541 units last year. PHOTO: FILE
KARACHI:  Honda Atlas Cars has announced a profit-after-tax of Rs314 million or per share earnings of Rs2.20 for the six-month period ended September 2013, compared with a loss of Rs71 million and loss per share of Rs0.50 last year.
However, the company’s profitability dropped in the quarter ending on September 2014 owing to the rupee’s depreciation against dollar.
“The lacklustre performance of the company in quarter (July-September 2014) is mainly linked with the fast rupee depreciation, which depreciated almost 8% in the last two months,” Summit Capital analyst Sarfaraz Abbasi said.

The depreciating rupee has increased the import cost of car parts that the company imports for assembling.
According to the company’s management, the company has booked a heavy exchange rate loss under other operating expenses which has reached to Rs606 million in the quarter ended September 2013, up from Rs41 million last year, Abbasi added.
On quarterly basis, the company has posted a loss after tax (LAT) of Rs13 million for the quarter ended September 2013, or a loss per share (LPS) of Rs0.09, compared with a profit of Rs150 million last year, or LPS Rs1.05 per share.
Sales
During the six-month period ending September 2013, topline of the company showed a growth of 67% year on year to Rs21.37 billion against the sales of Rs12.79 billion last year due to prices and rise in volumetric sales.
The company sold about 12,783 units during the period against the sales of 8,541 units last year. The main reason behind the higher growth in volumetric sales was a low base impact as company’s operation remained suspended because of non-availability of the imported parts due to floods in Thailand, a summit capital report said on Tuesday. However, Honda Civic continued to attract consumers as sales increased by a massive 117% year on year to 5,884 units as compare to 2,715 units in same period last year.
On the quarterly basis, sales of the company were down by 4% to Rs10.47 billion against the sales of Rs10.91 billion in the previous quarter due to lower volumetric sales that were down by 3% to 6,304 units against the sales of 6,479 units in the previous quarter.
Quarterly sales remained down due to the seasonal impact as Pakistanis purchase fewer cars during and after the monsoon season, Abbasi added.
The increasing trend of cost-push inflation, especially the recent hike in fuel and electricity, prices is likely to impact the primary margins of the company adversely. The production cost will also witness a sharp rise due to costly imports as rupee depreciates.
Published in The Express Tribune, November 27th, 2013. 

Source: http://tribune.com.pk/story/637361/financial-results-despite-speed-bumps-honda-announces-profits/

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