In a surprising turn of events, Honda Atlas Cars Limited (PSX: HCAR) has reported a remarkable profit after tax of Rs. 675 million in the quarter ended September 30, 2023 (2QMY24). This comes as a stark contrast to the loss of Rs. 385 million recorded in the same period last year, as revealed in the notification filed by the car maker to the Pakistan Stock Exchange (PSX).
Key Factors
One of the key factors contributing to this impressive turnaround is the substantial improvement in margins, which surged by 750 basis points on a year-on-year (YoY) basis.
Despite a challenging market environment, Honda Atlas Cars managed to enhance its gross profit significantly, reaching Rs. 1.52 billion during the quarter under review—an impressive 127 percent increase compared to Rs. 673 million in the same period last year
The gross margin also experienced a noteworthy improvement, climbing to 10.9 percent from the 3.4 percent posted in the same quarter last year. Arif Habib Limited attributes this positive shift to increased car prices and lower commodity prices, particularly in steel.
Despite a 28.6 percent YoY decline in sales to Rs. 13.9 billion during the quarter, the company’s top line for the half-year ending September 30, 2023, stood at Rs. 17.7 billion, reflecting a 64 percent decline on a YoY basis. The dip in sales was offset by cost-saving measures, particularly in distribution and marketing, which decreased to Rs. 212 million from Rs. 216 million in SPLY.
The finance cost of the company saw a substantial increase of 191 percent, soaring from Rs. 41 million to Rs. 120 million during 2QMY24. However, the company managed to mitigate this impact with a 14 percent increase in other income, reaching Rs. 896 million from Rs. 787 million in 2QMY23.
This impressive financial performance positions Honda Atlas Cars Limited as a resilient player in the automotive industry, navigating challenges with strategic pricing and cost management.
