Earnings of Honda Atlas took a massive hit in the quarter ended June 2019 as its profits dived 77% on the back of declining revenues.
According to a notice sent to the Pakistan Stock Exchange (PSX), the company reported after-tax profit of Rs 241.7 million in the quarter ended June 30, 2019 compared to Rs 1.05 billion in the same period of previous year. Earnings per share dipped to Rs 1.69 in the period under review compared to Rs 7.36 in the previous year.
The substantial decline in earnings was primarily due to a massive 25% year-on-year reduction in revenue. Meanwhile volumetric sales of the company dropped 33% year-on-year, from Rs 23.9 billion in Q1 previous year compared to Rs 17.9 billion in Q1 this year. The number of units sold during this quarter was 8,346 compared to 12,481 units in the same period last year.
In recent past, Honda Atlas hiked prices of different variants multiple times in the range of 8-23% due to rupee depreciation, 5% advance customs duty on raw material and imposition of federal excise duty (FED).
Other income plunged 67% to Rs 174.9 million due to low income from bank deposits as the company reduced cash balance in its accounts after decline in advance payments from customers. According to analysts, the operating expenses also jumped to Rs 739.8 million due to the exchange loss recorded by the company which is a 113% increase on year-on-year basis.
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Earlier this month, Honda Atlas announced to shut down its plant for 10 days amid slowdown in sales as it has piled up inventories of up to 2,000 units. Officials believe auto industry cannot bear the huge impact of 5% Advance Customs Duty (ACD) on all raw materials and imposition of 2.5-7.5% Federal Excise Duty (FED), which have badly affected sales and forced major players of the industry to halt production.