Listed automobile sector’s profits surge 4.6 times in FY21
KARACHI: The listed automobile sector posted outstanding financial results during FY21, as their net profitability increased 4.6 times on a year-on-year basis.
Arsalan Hanif at Arif Habib Limited attributed the jump in profits to low policy rate, helping car sales to increase drastically, as auto financing has increased Rs97 billion during FY21 and low base effect, amid lockdown announced country-wide, which restricted the economic activity.
“[The] rapid growth in [the] economic activity and appreciation of [the] rupee against regional currencies improving gross margins of the listed companies resulted in 62 per cent increase in the automobile sales in FY21 to 181,386 units, compared with 112,266 units in FY20.”
Likewise, tractor sales increased 56 per cent during FY21 to 50,656 units, compared with 32,531 units in the same period of the last year.
The revenues of the automobile sector increased 77 per cent to Rs574 billion during FY21, compared with Rs324 billion in the previous year.
“[The] sales revenue increased due to rising demand on the back of improving purchasing power parity, higher inflows of foreign remittances, and higher prices of vehicles, compared with the same period last year.”
Profitability of the automobile parts manufacturers grew in line with the assemblers due to improvement in the margins of all the listed players given massive demand from automobile assemblers, economies of scale and currency appreciation against the greenback, resulting in a surge in gross margins.
Indus Motors profits recorded a significant jump of 152 per cent to Rs12.82 billion in FY21 versus Rs5.082 billion in the preceding period last year.
The growth in profitability is attributable to volumetric growth of 102 per cent to 57,236 units (Yaris 28,295 units, Corolla 18,355 units, Fortuner 3,543 units, Hilux 7,043 units), compared with 28,378 units sold in the previous year.
Millat Tractors’ earnings settled at Rs5.78 billion, up 169 per cent, compared with Rs2.15 billion in FY20.
Pak Suzuki and Honda Cars goes from loss to profit in FY21, as the bottom-line of both the companies skyrocketed on account of massive decline in the finance cost given lower interest rate, drastic increase in volumes and higher other incomes given surge in advance from the customers.
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