Pak Suzuki, Pakistan’s largest auto assembler has announced its biggest-ever loss after tax (LAT) of Rs 12.91 billion in the first quarter ending March 31st, 2023. In contrast, the company reported a loss of Rs 460 million in the same period of the previous year.
This comes on the back of steeply declining sales mainly due to non-production days amid curbs on non-essential imports imposed by the State Bank of Pakistan, difficulties in obtaining Letters of Credit (LCs) which results in an insufficient inventory & CKD parts in hand required to assemble the vehicles, currency devaluation and insanely rising prices which have badly dented the sales of new vehicles.
As a result of this downward trend, Pak Suzuki’s equity decreased from 20 billion in Q1 of 2022 to around 7 billion in Q1 of 2023. The company’s revenue for the period stood at Rs 21.839 billion, down by 54% compared to Rs 47.736 billion recorded in the same period last year. Revenue also declined by 64% on a quarter-on-quarter (QoQ) basis, led by a 74% year-on-year (YoY) and a 70% QoQ decline in unit sales.
Pak Suzuki’s finance cost – which includes exchange loss, the markup on late delivery, and demurrage & detention charges – was up 12 times YoY and 3 times QoQ to Rs 12.8 billion in the first quarter of 2023, according to Topline Securities. The company previously stated that the post-year-end devaluation of the rupee versus the US dollar had caused an unrealized loss of Rs. 9 billion, which would affect the financial performance for 2023.
The net sales of the company decreased by 54% year-on-year (YoY) to Rs. 21.8 billion as compared to Rs 47.7 billion last year. The automaker’s distribution and marketing expenses were up 20% YoY while falling 18% QoQ to Rs878 million “in line with the decline in volumetric sales and higher inflation.” Meanwhile, Pak Suzuki’s ‘other income’ also plunged 86% YoY and 87% QoQ to Rs74 million in Q1, 2023. The company reported a Loss Per Share (LPS) of nearly Rs 157 in Q1-2023 against an LPS of Rs 5.6 in Q1-2022 and an LPS of Rs 47 in Q4-2022.
Auto Industry Woes Continue
According to data provided by the Pakistan Automotive Manufacturers Association (PAMA), the country’s auto industry reported car sales of only about 9,200 units in March, which is 66% less than the number in March 2022.
Automakers are anticipated to have decreased volumes as a result of challenges on both the demand and supply sides because there is no imminent resolution to the issue of opening of LCs in sight. In FY23, analysts forecast a cumulative fall of more than 50% YoY, which could extend into the first half of FY2024.
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