HCAR reports losses of Rs 511 million as lockdown restrictions damage company's revenue

July 24, 2020 (MLN): Honda Atlas Cars (Pakistan) Limited has declared net losses of Rs. 511 million (LPS: Rs. 3.58) for the quarter ended June 30, 2020, as compared to the profits of Rs. 241.7 million recorded in the same period of last year.

The massive decline in earnings seen in the financial results below is a result of lower volumetric sales during the period, on the back of lockdown restriction imposed by the Federal and Provincial Government to contain the spread of COVID-19. The gross profits of the company came down by a whopping 96% due to PKR depreciation and higher fixed costs.

The increase in short-terms loans taken by the company during the quarter resulted in a 64% increase in finance costs. It is interesting to note that the company’s decision to substitute local currency loan with short term loan of $14 million from a related party (Asian Honda Motor Company) at 3.2% mark up, as reported by IGI Securities, failed miserably in bringing down the finance cost.

Some of the positive highlights from the results include a 83% decline in non-core income, as well as a 2% fall in income tax expense.

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