Pak Suzuki Motor Company Limited (PSMCL) has announced a significant net loss of Rs9.68 billion for the fiscal year that concluded on June 30, 2023. The loss, a substantial increase from the previous year’s Rs17.238 million loss, has been attributed to import restrictions and weakened demand, casting a shadow over the company’s financial performance.
The drop in sales was primarily a result of operational disruptions stemming from inventory shortages. Consequently, the loss per share (LPS) skyrocketed to Rs117.58 for this fiscal year, marking a sharp contrast to the Rs0.21 LPS recorded during the period from January to June 2022. Notably, despite the challenges, the cost of sales remained relatively stable at Rs39.037 billion compared to Rs108.415 billion in the prior year.
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The financial expenses escalated to Rs10.141 billion from Rs1.842 billion last year, significantly contributing to the heightened losses incurred. However, there was a glimmer of hope as the company achieved a Rs3.238 billion profit for the quarter ending on June 30. This performance showcased a remarkable improvement from the Rs442.989 million recorded during the same quarter the previous year. Earnings per share for this quarter stood at Rs39.36, contrasting with Rs5.38 per share reported in the corresponding quarter of the previous year.
Industry experts have highlighted that the second-quarter results outperformed expectations, partly due to elevated gross margins resulting from car price hikes. Additionally, the company benefited from a finance income of Rs2.6 billion attributed to exchange rate gains.
During this challenging period, the company faced a 67 percent year-on-year and 2 percent quarter-on-quarter drop in revenue, largely due to disruptions in raw material supply and diminished demand. Despite these headwinds, PSMCL managed to achieve a 10 percent gross profit margin in the second quarter of CY2023, reflecting a substantial improvement from the 4 percent margin recorded in the same quarter of the previous year.
The automobile sector in Pakistan continues to grapple with challenges such as obtaining Letters of Credit (LCs) for imports and sluggish demand influenced by high prices and interest rates. Car sales, as reported by the Pakistan Automotive Manufacturers Association (PAMA), witnessed a year-on-year decline of 57 percent in the first month of fiscal year 2023–24. PAMA-registered car manufacturers sold only 5,092 units in July, marking a 16 percent decrease from the previous month.
Despite the formidable challenges faced by Pakistan’s auto industry, including reduced sales and operational disruptions, it’s essential to note that car prices within the country remain at their peak levels.
