Pak Suzuki Motor (PSMC) reported its 1Q2022 result today where the company booked a loss of Rs5.6/share against a profit of Rs9.5/share in the same period last year. The result during the quarter was lower than industry expectations mainly due to higher than expected depletion in gross margin and higher than expected finance cost.

Gross Margins of the company decreased by 3.3pts YoY and 0.7pts QoQ to clocked in at 2.8% due to higher material prices, rising ocean freight cost and PKR devaluation. To note, car assemblers increased prices in Nov-21 to control costs.

Finance cost significantly increased by 3.2x YoY to Rs1,031mn as compared to Rs250 in 1Q2021 owing to increase in mark-up on late deliveries and exchange loss. Major chunk of finance cost during the quarter is from mark-up on late deliveries, as per our channel checks.

Revenue growth in 1Q2022 (32% YoY/9% QoQ) was driven by volumetric increase of 31% YoY and higher car prices.

Other Income decreased by 15% YoY to clock in at Rs527mn in 1Q2022 due to lower cash balance.

Courtesy – AHCML Research