Pak Suzuki Motor Company (PSMC) announced its 4Q2021 financial results, where the company has posted profit of Rs489mn (EPS: Rs5.94) against profit of Rs1,221mn (EPS: Rs14.80) in same period last year. The result came lower than our expectation where the major deviation came from lower than expected gross margins.
Sequentially gross margins decreased by 1.7ppt mainly due to Increase in freight cost according to management. Gross Margins decreased by 5.7ppts YoY to 3.6% in 4Q2021 due to freight cost along with currency devaluation and increase in raw material prices. To note, freight cost has increased by 400-500% YoY which along with material shortage has increased the overall cost.
This takes 2021 profits to Rs2,679mn (EPS: Rs32.56) against loss of Rs1,378mn (LPS: Rs16.75). The significant recovery in earnings is mainly attributable to increase in unit sales by 108% YoY during 2021 due to easing of COVID-19 related lockdown and economic resurgence.
Alongside result, the company has also announced final cash dividend of Rs6.5/share.
Other Income rose up by 142% YoY to Rs932mn in 4Q2021 due to stronger order book and higher interest rates.
Finance cost increased by 39% YoY to clocked in at Rs368mn due to higher interest rates
Effective tax rate has clocked in at 31% in 4Q2021 as compared to 28% in 4Q2020.
Courtesy- AHCML Research