HCAR swings to profit on higher gross margins

July 29, 2021 (MLN): Honda Atlas Cars Ltd. (HCAR) has announced its financial results for the 1QMY22. As per results, the company has recorded a net profit of Rs928 million (EPS: Rs 6.50), a turnaround from the same period of last year when it suffered a net loss of Rs511mn (LPS: Rs3.58).

This turnaround in earnings is due to the revival of economic activity, lower auto financing rates, GDP growth along improvement in purchasing power parity, as per the report by Arif Habib Limited.

During the period under review, the topline went up by 3.34x YoY to Rs21.76bn on an account of higher growth in sales volume which stood at 7,593 units against 2,329 units in 1QMY21 owing to attractive financing rates. Despite a three-fold increase in the cost of sales, this substantial increase in topline expanded the gross margin from 0.83% to 7.33% amid appreciation of PKR against USD and economies of scale.

The margins also improved on the back of high pre-bookings for the highly anticipated 6th Generation Honda City expected to be released later this year.

On the cost side, the distribution cost plunged by 27% YoY whereas administrative expenses jumped by 56% to stand at Rs230mn.

On the other hand, the other income increased substantially by around 4 times YoY to peg at Rs335mn. Meanwhile, the finance cost declined by 87% YoY to Rs11mn. However, the company booked a tax expense of Rs435mn, up by around 4x YoY in the first quarter of MY22.

Profit and Loss statement for the first quarter ended June 30, 2021 ('000 Rupees)

 

Jun-21

Jun-20

% Change

Sales

 21,764,731

 6,511,889

234.23%

Cost of sales

 (20,169,943)

 (6,457,666)

212.34%

Gross profit

 1,594,788

 54,223

2841.17%

Distribution & marketing cost

 (132,469)

 (180,804)

-26.73%

Administrative expenses

 (230,996)

 (147,909)

56.17%

Other income

 335,269

 90,932

268.70%

Other expenses

 (191,566)

 (125,552)

52.58%

 

 (219,762)

 (363,333)

-39.51%

Profit/ (Loss) from operations

 1,375,026

 (309,110)

Finance cost

 (11,487)

 (89,356)

-87.14%

Profit/ (Loss) before taxation

 1,363,539

 (398,466)

Taxation

 (435,315)

 (112,562)

286.73%

Profit/ (Loss) after taxation

 928,224

 (511,028)

Earnings/ (Loss) per share – basic and diluted

 6.50

 (3.58)

 

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Posted on: 2021-07-29T14:26:00+05:00

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