Honda Atlas Cars’ profit plunged 40.68 percent to Rs445.9 million for October-December 2021 on the back of a surge in distribution and marketing costs and high other expenses.
According to a notice sent to the Pakistan Stock Exchange, the company had reported a profit of Rs751.8 million in the same period of 2020. Earnings per share of the company fell from Rs5.26 in October-December 2020 to Rs3.12 in the same quarter of 2021.
Net sales jumped from Rs17.6 billion in the October-December quarter of 2020 to Rs29.5 billion in October-December 2021, an increase of 67.36 percent.
In a report, Arif Habib Limited analyst Arsalan Hanif stated that the rise was witnessed due to volumetric growth in sales of 67 percent year-on-year and 13 percent quarter-on-quarter to 10,376 units (with 9,827 units of Civic/City and 549 units of BR-V).
“Gross margins dropped to 2.71 percent in the quarter against 6.52 percent in the corresponding quarter of the previous year,” he said. “Decline in margins is mainly attributable to rupee depreciation, higher freight costs, higher steel prices and delay in passing on the price to consumers.”
Distribution and marketing expenses of the firm more than doubled to Rs181.3 million in the quarter under review. The firm had paid Rs89.9 million under the same head in October-December 2020.
The company reported a 20 percent rise in administrative expenses, which surged from Rs206.6 million in October-December 2020 to Rs246.9 million in the past three months.
On the flip side, other income of the auto company spiked 117% to Rs530.5 million in the quarter under review against Rs244 million in October-December 2020.