HCAR: Lower distribution expenses and higher other income lead to profit of Rs 6.29 per share

January 28, 2021 (MLN): Honda Atlas Cars (Pakistan ) Limited (HCAR) has announced its financial results for 9MMY21, wherein the auto assembler reported a decent net profit of Rs 897.65 million with earnings per share (EPS) of Rs 6.29 compared to the profits of Rs 710 million (EPS: Rs 4.97) in the corresponding period of last year, marking a jump of 26.4% YoY

The increase in profitability can be attributable to lower distribution costs and significantly higher other income, offsetting lower gross margins.

During the period, net sales of the company went up by 13% YoY on the back of an incline in volumetric sales and multiple price hikes. However, Gross margins fell to 5.8% from 8.1% largely due to increased freight costs amid covid induced supply chain disruptions and lower sales in the high margin segment.

The other income of the company witnessed a sharp increase of 90.8% YoY owing to a possible increase in short-term investments and cash deposits stemming from an increase in advances.

Furthermore, a significant decline in financial charges by 75.7% YoY due to series of rate cuts in benchmark interest rates, further strengthened the company’s earnings.

The effective tax rate came in at 49% as against 32% booked in the same period of last year.

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