PSMC rebounds into profits due to strong first-quarter sales

April 22, 2021 (MLN):  Pak Suzuki Motors Company (PSMC) reported its 1QCY21 result today, posting a profit after tax of Rs 778 million (EPS: Rs 9.45) compared to a loss after tax of Rs 941 million (LPS: Rs 11.44) in the corresponding period last year.

The rebound in bottom-line was mainly driven by volumetric growth in sales, upsurge in other income and lower finance cost.

The company’s net sales witnessed a two-fold increase on the back of higher volumetric sales of its vehicle line-up in 1QCY21. To highlight, this abnormal increase is also due to the low base effect because of the COVID situation in Mar’20, a report by Foundation Securities cited. As a result, the gross margins improved from 3.23% to 6.12%

On the cost front, the distribution and marketing expense jumped by 2x YoY to Rs 710 million during the said period. The administration expense increased to Rs 666 million, up by 15% in 1QCY21, attributable to disbursement of employee bonus for CY20, said Taha Madani, a Research Analyst at BMA Capital.

Other income increased by 9.5 times YoY to Rs 619 million in this quarter due to exchange gain on translation of FX denominated borrowing from the parent company, in view of Foundation securities.

Meanwhile, the finance cost substantially decreased by 77%YoY because of repayment of short-term borrowing and decline of 625bps in the policy rate.

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