Pak Suzuki Motor Company Limited (PSMC) announced its financial result for 1QCY23 whereby the company posted a loss after tax (LAT) of PKR 12,916mn (LPS: PKR 156.94) against a loss after tax (LAT) of PKR 460mn (LPS: PKR 5.59) during 1QCY22 and LAT of PKR 3,830mn (LPS: 46.54) during 4QCY22, mainly due to mammoth jump (12x YoY) in the finance cost amid exchange losses and a decline in volumetric sales.

Result Highlights

· Net sales shrunk by 54% YoY to PKR 21.8bn, mainly due to lower volumetric sales amid slowdown in the demand on account of lower production and higher prices. In addition, the PSMC automobile plant was shut down in the month of Jan’23 and Feb’23 due to lower availability of the raw material on the back of SBP’s restrictive measures.

· Total volumetric sales shrunk by 74% YoY (9,552 vs 36,716 units in 1QCY22).

· Gross margins arrived at 9.1% during 1QCY23, slightly lower than last quarter, as higher car prices and a significant reduction in steel prices offset the impact of volumetric decline and PKR depreciation.

· Other income declined by 86% compared to SPLY, majorly due to lower interest earned on declining cash and cash equivalents, which stands at PKR 3.7bn as at Dec’22.

· During 1QCY23, finance cost increased by 12.4x YoY to PKR 12.6bn, attributable to the booking of exchange losses. PSMC mentioned that it had an outstanding foreign liability of USD 218mn as of 20th Mar’23, and the company had an unrealized loss of ~PKR 9bn. This loss is materialized in the outgoing quarter, hurting the overall profitability by ~109.3/share.

· The company booked taxation at PKR 274mn in 1QCY23, compared to a tax reversal of PKR 188mn in 1QCY22.

Courtesy – AHL Research