Honda Pakistan’s quarterly profit declines by 29%

• Honda Atlas Cars Pakistan Ltd (HCAR) reported a reduction in profits of 29.10 percent.
• The vehicle manufacturer declared a profit of Rs. 658.20 million for the first quarter, down from Rs. 928.22 million in the previous year.
• Since January 2022, HCAR has seen excellent sales each month for the 6th generation Honda City.

Honda Atlas Cars Pakistan Ltd (HCAR) reported a reduction in profits of 29.10 percent.

The vehicle manufacturer declared a profit of Rs. 658.20 million for the first quarter that ended on June 30, 2022, down from Rs. 928.22 million in the corresponding period of the previous year.

Due to lower taxation than anticipated and higher gross margins than anticipated, the results are nevertheless better than the industry’s expectations.

However, compared to the same period last year, when sales were recorded at Rs. 21.76 billion, they increased by 39 percent in the first quarter to Rs. 30.24 billion.

Due to several price hikes and a 24 percent YoY rise in volumetric sales, revenues increased.

In comparison to the Rs. 1.59 million posted in the same time the previous year, the company declared a gross profit of Rs. 1.91 billion, an increase of 20.13 percent.

Gross margins were 6.3 percent in the first quarter of this year compared to 7.3 percent in the same period last year. This is a result of the PKR devaluation’s enormous impact on the price of raw materials. Honda was unable to fully pass on the effects of multiple price hikes to customers.

Distribution and marketing costs went from Rs. 132 million to Rs. 242 million, an increase of 83.4 percent. From Rs. 191 million over the period to Rs. 753 million, the company’s other expenses climbed by 295 percent.

Due to a rise in new car reservations, the company’s other revenue grew to Rs. 526 million, up 57 percent from Rs. 335.26 million.

In comparison to a loss per share of Rs. 6.50, the firm posted earnings per share of Rs. 4.61.

The share price of HCAR on the stock exchange ended Tuesday at Rs. 157.71, down Rs. 0.70 or 0.4%, with a turnover of 44,782 shares.

Market Conditions

Since January 2022, HCAR has seen excellent sales each month, mostly as a result of the popularity of the 6th generation Honda City. City surpassed models including the Toyota Corolla, Yaris, Suzuki Swift, and Changan Alsvin to become the best-selling sedan in June 2022.

However, due to the severe depreciation of the local currency, tax rate increases, and an increase in operational costs, HCAR is having trouble meeting demand, much like the whole local vehicle industry.

According to a recent report, as a result of the aforementioned difficulties, the company has reduced its production volume by switching to single-shift operations.

Given how uncertain the economy is right now, which includes the general population, there is more interest than ever in the future of the auto industry.

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