Pak Suzuki Motor Company Ltd. (PSMC) announced its 3QCY23 result today, where the company posted earnings of PkR3.8bn (PkR46.2/sh) compared to PAT of PkR3.2bn (EPS: PkR39.4) in the quarter before (↑17%QoQ). The said increase in the profit is mainly attributed to an improvement in gross margins and lower effective tax for the quarter.
· Auto manufacturer’s topline stood at PkR29.9bn (up 40%QoQ), primarily due to increase in sales volumes, with the company selling 10.4k units during the quarter, compared to sales of 7.4k units in 2QCY23.
· Gross margins improved to 14.2% during the quarter, up from 10.1% in the previous quarter. This improvement can be attributable to full impact of last price increase being materialized during the quarter, as well as decline in CRC prices and PkR appreciation against the Japanese Yen (avg. PkR2.02/JPY vs PkR2.08/JPY in the previous quarter).
· Distribution expenses increased by 147%QoQ to PkR600mn, mainly due to elevated transportation charges resulting from the growth in sales volumes and increased marketing expenses owing to increased competition.
· Furthermore, financial charges again reported negative for the quarter, at PkR-145mn, which could potentially be a reversal of exchange loss (same as in previous quarter). While, further clarity is awaited to understand the exact reason for this development.
· Moreover, other income clocked in at PkR761mn, remaining flat QoQ while a decline of 29% on an annual basis.
· Taxation for the quarter remained down in the quarter, clocking in at PkR309mn (ETR: 7.5% vs 28.1% in the previous quarter). This decline can possibly be due to company materializing deferred-tax assets during the quarter.
· Finally, for the nine-month of the calendar year, the company’s loss amounts to PkR5.9bn (LPS: PkR71.3), primarily due to a substantial finance cost of PkR12.8bn incurred in the 1QCY23.
· At last, company’s board has given approval for the voluntary delisting in today’s meeting.
Courtesy- AKD Research