Pak Suzuki Motor Company Limited has revealed its financial results for the first half of 2019, which ended on 30th June 2019, and it discloses a loss of Rs.1.5 billion to the company.
One of the leading auto manufacturers in the country, Pak Suzuki, is somehow least affected by the current economic slowdown process, but still, the stats suggest a decline in profits of the company. The Japanese auto giant gained a profit of Rs.1.29 billion in the same period during 2018. The overall sales of Pak Suzuki in this tenure have jumped 4.86% to Rs.65.42 billion as compared to Rs.62.39 billion in the previous year. Despite a drop of 11.26% in the volumes, the reason behind this particular increase in net sales is mainly due to the high amount of percentage hike in the prices of cars during the last six months or so.
At the moment, the playing field for all the auto manufacturers is getting tough due to the high costs of production owing to the duties and taxes levied by the government in the recent past. The depreciation of rupee against the US dollar is also doing no good to the auto industry as the cost of raw material is rising insanely. The government has also played its part in worsening the situation by imposing 5% advance customs duty (ACD) on the import of raw material. The Federal Excise Duty (FED) has now long been criticized by the market insiders since they believe the auto sector cannot bear the additional duties. The cost of sales for Pak Suzuki also increased by 10.32% to Rs.64.05 billion from the previous Rs.58.06 billion, which has played a handy role in bringing down the gross profit margin. The profits of the company declined by a whopping 68.58% to just Rs.1.37 billion in comparison to Rs.4.36 billion during the first half of 2018. The auto manufacturer’s car sales volume description for each model is mentioned in the table below.
The above stats indicate that the company went through a total decrease of 11.25% in sales volumes during the first half of 2019 as compared to the same period last year. However, one of the main reasons for this decline is also the discontinuation of the iconic Mehran, which previously contributed to the sales volume to a great extent. The all-new 660cc Alto has now replaced it with a high expectation of filling the big shoes of Mehran as far as Pak Suzuki is concerned. The company has already sold 1685 units of Alto in no time what so ever. Apart from that, Suzuki Swift has faced the major hit as its sales went down by 23.74%, followed by Bolan and Ravi with 15.61% and 12.44% respectively. On the other hand, Wagon R remains the backbone of the automaker in terms of sales as it went up by 8.87% despite all the issues faced by the auto industry. Cultus has also started to gain confidence in the consumers as its sales went up by 8.53% during the first half of 2019.
Due to an increase in the interest rates, the finance cost of the automaker also went up from Rs.92.86 million to Rs.706.42 million. It has also been reported that a loss of Rs.18.53 per share was suffered by Pak Suzuki in comparison to earnings per share of Rs.15.77. However, the company got a benefit of the tax reversal of Rs.600 million.
PakWheels always focuses on raising the voice of the consumers of the auto sector and the new taxes and duties levied by the government is literally unjust and should be withdrawn as soon as possible. What are your thoughts regarding the story? Let us know in the comments space and stay connected for more statistical updates related to the automobile industry.
Pak Suzuki having cost of sales of 64 billion on revenues of 65 billion? Plain lies, nothing else. They’re using transfer pricing to show losses in Pakistan.
A big portion of the drop in sales numbers is due to discontinuation of Mehran, with a decrease of 15,000 units in the first half of 2019 compared to the first half of 2019. If you factor this in to the overall equation, we see that the major effect of the loss of sales (-11%) as quoted in the article is not due to the the revised tax rates rather than from a change in the company operations.
correction: 5,000 units in the first half of 2019 compared to the first half of 2018.
This does not mean there is loss, you use decline in profit comparatively previous years. If sale is greater than COS than how it is in loss. When govt imposed 5% duties on import of raw material and compare raised 10% price how would it possible. Lie, lie and lie….
PKR 1.5 billion is not a loss rather a decline in profit.Pak wheels use a qualified accountant before posting hair brained.
this all becuse your expensive products,plus no change in model style and no good quality or poor quality of doors,switch,seat,mirrors and what i say the same company import cars are more better then pakistan assembelled cars its company CEO duty to saw the matters and taken strong action against whom are responsible for this
Poor quality of material used, lack of security features, dangerous for driver in case of accident, no innovation and style all leading to this decline. John
Pakwheels is a reputable organization, please refrain from posting false information. The heading should be, decrease in profits not a loss. If you are going to talk about financial matters let someone that knows finance better make such posts. There are more than just exchange rates when it comes to accounting , transfer pricing is one tool use to manipulate profits just to avoid taxes and that is not just one. I’m sure all these auto giants must be using some sort of hedging to even out the exchange rates. For God sake don’t rob on the trust we place in you PW
I hope PW had read your comment. Slowly but gradually, PW is losing its credibility in the eyes of people of Pakistan, especially the educated person who have much information in this digital age.
100% correct. I don’ understand how PW allows these type of uneducated persons firstly to write an article on a subject (for which he/she is no knowledge at all) and then PW publish that on their website. I hope PW had read your comment. Slowly but gradually, PW is losing its credibility in the eyes of people of Pakistan, especially the educated person who have much information in this digital age.
I don’ understand how PW allows these type of uneducated persons firstly to write an article on a subject (for which he/she has no knowledge at all) and then PW publish that on their website. I hope PW had read your comment. Slowly but gradually, PW is losing its credibility in the eyes of people of Pakistan, especially the educated person who have much information in this digital age