Pak Suzuki Motors Co. Ltd. (PSMC) reported a loss of PKR2.9bn (LPS: PKR35.49) for CY19 accompanied by a reversal in taxation booked for the year at PKR2.5bn. On a quarterly basis, the company has reported a loss of PKR1.2bn before taxation, translating into a LPS of PKR2.84 in 4QCY19 in contrast to loss of PKR94mn (LPS: PKR1.15) in SPLY.

Topline for the recent quarter stood at PKR25.5bn down 1% QoQ as volumes for the company decreased. We attribute lower volumes for the year to phasing out of Mehran and dismal demand during the quarter owing to calendar end phenomena. Topline for the year resided at PKR116.6bn for CY19, down 3% YoY.

Gross margins stood at 1.7% after witnessing a drop of 4.2ppts in CY19 vis-à-vis 5.9% in CY18. The margins for 4QCY19 rebounded to 3.3% amid stable PKR parity against the greenback.

Finance cost remained elevated to stand at PKR2.1bn, up 5.8x YoY as the company took on short term borrowing to finance working capital amid rising interest rate environment.

Further, taxation for the quarter saw a reversal amounting to PKR 1.0bn taking net reversals to PKR2.0. (BMA Capital Management Ltd.)