March 22, 2021 (MLN): Pakistan Suzuki Motor Company Limited (PSMC) has disclosed its financial results for CY20 as per which the company’s net losses after tax shrank by 46% YoY to Rs1.589 billion compared to Rs 2.29 billion in CY19.
This reflected in loss per share of the company which narrowed from Rs 35.49/share to Rs 19.31/share.
During the year, PSMC’s revenues went down by 34% YoY, mainly due to low sales during the phase-1 lockdown. However, the gross margin of the company improved to 4% from 2% in the previous year mainly on the back of 36% YoY decline cost of sales, stable PKR-USD parity, and higher car price during 4QCY20.
On the cost front, the company witnessed a 35% and 30% YoY decline in distribution and admin-related expenses which provided a cushion to its earnings. On the contrary, despite lower interest rates, the finance cost of the company jumped by 28% YoY on account of higher short-term borrowing during the year, as the company was holding inventory of cars in Jun-2020 which it was unable to sell due to COVID-19.
The other income of the company grew sharply by 3.16x YoY which can be attributed to the inflow of advances from customers.
The company has been slowly ramping up production and in order to meet the high demand, and has moved to double-shift production since Jan’21 as supply constraints during the last quarter of 2020 ease up. With the recent appreciation of the Rupee, easing of the supply chain issues, and price increases during 4Q, PSMC’s gross margin is expected to further improve in CY21.
Moreover, the decline in interest rates has increased the overall amount of consumer financing for cars from Rs 211 billion in Jun-2020 to Rs 256 billion in Dec-2020. Going forward, this will increase PSMC’s sales as according to the report by Topline Securities, 30-40% of PSMC sales are through this mode.
Financial Results for the Year ended December 31, 2020 (Rupees in thousands)
Cost of sales
Reversal/(provision) of impairment losses
Loss from operations
Share of loss of equity accounted investee
Profit before taxation
Net Profit for the period
Loss/ Earning per share basic and diluted
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