Atlas Honda goes through a massive decline of 27.2% in profits

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Atlas Honda Limited has announced its financial results for the half-year period from April-September, and it shows that the company has suffered by a massive decline of 27.2% in its profits.

Atlas Honda, one of the oldest and leading motorbike manufacturers in the country, has gone through a rough period during the half-year ended on 30th September 2019. In this period, the company was hit by a major blow as its profits went down by as high as 27.2%. The motorbike manufacturer revealed a profit of Rs.1.14 billion during this period as compared to Rs.1.94 billion in its corresponding period last year. Despite the prevailing economic contraction period in the country, the company managed to achieve a net sales figure of Rs.41.3 billion, up by 0.4% as compared to last year. The overall automotive sales in the country have declined considerably in the past year, but the leading motorbike manufacturer managed to sell over 526,154 units during the half-year under review. In its corresponding period last year, the company sold 543,894 units of its motorbikes in the country. However, due to a decline in sales volumes, the gross profit of Atlas Honda plunged by 19.7%.  The company posted a gross profit of Rs.3.0 billion as compared to Rs.3.8 billion last year.

The dropping sales in the country are anticipated by a sharp devaluation of Pakistani Rupee against the US dollar that resulted in a rise in motorbike prices. The local companies have revised their products’ prices multiple times in the last year hence reducing the demand in the market. As far as the company’s expenses are concerned, its sales and marketing expenses took a bow due to enhanced promotional activities and a significant rise in petroleum prices. These expenses increased by 9.2% to Rs.1.0 billion in the period under review. The administrative expenses also went up by 3.8% due to the economic crisis and inflation situation in the country. The finance costs climbed by 25.8% to Rs.13.8 million; however, the other income of the country was increased by 24% to Rs.540 million during this half-year ended on 30th September.

Furthermore, the earnings per share (EPS) went down by Rs.4.3 and recorded as Rs.11.4 in this period as compared to Rs.15.7 last year. According to the company’s financial results, its cash dividend stood at Rs.6.5 per share. The motorbike manufacturer’s shares at the Pakistan Stock Exchange (PSX) went down by Rs.2 and closed at Rs.308 with a turnover of 200 shares. Considering the tough economic circumstances in the country, Atlas Honda has managed to remain the leader in the motorbike manufacturing in Pakistan as it holds on to the highest market share in the local sector. Perhaps it continues its growth in capturing more shares in the deteriorating market. The automotive industry is going through a bumpy road this year with declining sales due to reduced demand in the market. Atlas Honda, however, has somehow retained its sales as it’s one of the most popular motorbike brands in the country with a wide range of products on offer. Note here that the company recently hiked the prices of its motorbikes, which will come into effect from November 2019. It’s certainly a strange sort of price revision from Atlas Honda as the value of Rupee has only recovered in the last four months. The popular CD 70 now costs Rs.75,500/- whereas Honda CG 125 is available at Rs.125,500/- in the local market. In a low sales period, the upward revision in the prices worsens the situation for both end consumers and the companies. Let’s hope the automotive industry gets out of this rough patch soon.

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