Panther Tyres – expansion to cost PKR 3.5bn, completes in three phases in 4QFY22

The management of Panther Tyres Limited (PTL) held a corporate briefing session today to discuss the 1QFY22 financial results and the future outlook on the company’s strategy in the future.


· Panther Tyres Limited (PTL) posted earnings of PKR 110mn (EPS: PKR 0.66) in 1QFY22, decreasing by 57% YoY from PKR 254mn (EPS: PKR 1.51) in 1QFY21.

· During 1QFY22, the company’s top line increased by 11% YoY to PKR 4.9bn attributable to the higher selling price of the product and 4% growth in volumes.

· Gross margins settled at 9.09% in 1QFY22, down by 642bps YoY due to depreciation of PKR and excess freight cost.

· Freight cost of the company increased by 4-5 times which has increased the company’s cost of production. At present, freight costs have stabilized as PTL is not experiencing any significant increase in production price since costs were passed on to customers.

· Currency depreciation is negative for PTL since it augments the cost of production. However, this makes PTL tyres competitive against imported tyres.

· During 1QFY22, capacity utilization remained over 80%.

· Tractor manufacturing companies do not allow PTL to hike tyre prices since the government of Pakistan does not allow them to augment tractor prices. This has resulted in a slowdown in gross margins.

· Replacement market margins have reverted previous highs while PTL is still facing problems to increase prices for OEMs. Management expects margins of the company to be around 15% by 3QFY22.

· PTL has not witnessed any slowdown in exports volumes; instead, sales have grown all around the globe.

· Majority of the raw material is imported and consists of around 80-85% of total raw material cost.

· Total Capex size of expansion is around PKR 3.5bn which will be completed in three phases (the first phase completed in Sep’21, the second phase is expected by the end of 3QFY22 and the third phase is expected by the end of 4QFY22).

· Management believes that Atlas Honda is expanding its capacity and therefore, PTL will be able to cater to the demand of motorcycle tyres.

· Tractor tyres are high margin products and their share in the overall profitability will be higher.

· Tractor OEMs market share is around 50%, 35-40% market share of ATLH, 30-35% market share of Chinese motorcycles.

· Increase in localization of raw material is not possible because raw material of tyres is not being manufactured in Pakistan currently.

Courtesy – AHL Research


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