PSMC Preview: A sad state of affairs

July 23, 2019 (MLN): Pak Suzuki Motors Company is scheduled to hold its board meeting on July 24, 2019, wherein the directors of the company will discuss and present the financial results for the quarter ended June 30, 2019 (2QCY19).

Almost all the brokerage houses are expecting the company to post negative earnings, as compared to profits of Rs. 1,298 million (EPS: 15.77) during the same period last year. The losses are expected on the back of drop in sales volumes, in spite of an increase in car prices over the previous quarter. Moreover, the gross margins of the company are expected to be heavily impacted by PKR devaluation.

In addition, the finance cost of the company is expected to shoot up on account of rise in net borrowings, hence further dragging down net profits.

As per a research note by Next Capital, the phasing out of Mehran has had a negative impact on the financial health of the company. Furthermore, the removal of regulatory barriers on non-filers from purchasing new cars has also played a significant role in dragging down the overall top-line earnings of the company.

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