In the ever-changing landscape of the automobile industry, two giants, Indus Motor Company Limited (INDU) and Pak Suzuki Motor Company Limited (PSMC), have been navigating some financial challenges in the form of losses on the road. The companies’ board of directors (BoD) recently met to discuss their financial results.
Losses By Indus Motors
Indus Motors’ (INDU) recent financial results have been like a roller coaster ride, with earnings taking a dip. The company’s earnings per share (EPS) for the financial year are expected to plummet by a significant 53%. The reasons behind this ride have been discussed throughout the past year. The auto sector faced a rough patch due to:
Inflation Impact: Rising inflation hit the auto sector, affecting affordability and demand.
High Interest Rates: Elevated interest rates discouraged potential buyers from making purchases.
Consumer Caution: Consumers adopted a more careful spending approach, impacting auto sales.
In the last quarter, INDU faced a hurdle as well. They sold fewer cars, a total of 5,513 units. This change in pace caused their revenue to drop by 18%, coming to around PKR 39.6 billion. It’s like having a slow drive when you’re used to zooming ahead. But that’s not all – there were additional expenses like the super tax, which also contributed to the dip in profits. Despite these twists and turns, INDU is planning to offer a cash dividend of PKR 12.0 per share. It’s like sharing a small treat after a challenging journey.
Pak Suzuki Decrease In Loss
On the other side of the road, we have Pak Suzuki Motor Company Limited (PSMC). This journey has been a bit different. In the last quarter, PSMC faced a major loss. But guess what? This time, the loss is expected to shrink. In the last quarter, they sold only 7,441 cars, which is not a high number. This affected their revenue, causing it to drop by 17%. However, the price hikes from the previous quarter balanced things out a bit. The gross margin is expected to be around 6.4%, which shows that PSMC is taking strides toward improvement.
These two giants are facing challenges and losses in their own unique ways. INDU is working to tackle the impact of various factors on their earnings, while PSMC is making progress in recovering from a significant loss. Despite the challenges, both companies are determined to keep moving forward, adapting to the changing terrain of the automobile industry. It’s like they’re in a race against time, working to overcome the hurdles and reach the finish line.
And there was Business Recorder backed report claiming about thumping profits, I wonder from where they got financial statements? Because no qualified accountant or even part qualified accountant shall have dared republishing the lying report, the damn thing did not even segmented the profits between cost centres.
I’m a little confused…
By losses, does it mean (correctly) that their revenue went into the red? Going by what is presented, these companies still made a significant profit. Sales are down by 60 or 70% on average; yet the revenue “loss” is only 18% and 17% (Toyota Indus and Pak Suzuki respectively). If Indus can still pay out a cash dividend to its shareholders, would they have been able to do this if the company were really suffering losses and was in the red?
“Indus Motors’ (INDU) recent financial results have been like a roller coaster ride, with earnings taking a dip.”
Agreed. Profits have taken a dip, but can we really term this as a “loss”?
In my humble opinion, this is a prelude to a price increase. Every time a price hike was/is to come these companies always beat this drum of “losses”.
On the one hand people are reporting on these companies taking losses; on the other hand, others are reporting on the significant gains these companies have made. Again, really confusing…..
* https://propakistani.pk/2023/08/25/pak-suzuki-posts-massive-631-increase-in-profit-despite-decrease-in-sales/