Pakistan Suzuki Motor Company (PSCL) announced its financial results for the first quarter of 2019, ending on 31st March, reporting a loss of Rs. 980 million. The car manufacturing firm booked a profit of Rs. 904 million in the same period last year.
This is the company’s largest loss in 10-years:
As an economic slowdown looms, Pakistan’s largest domestic auto company started the calendar year in the red. The company’s revenues jumped 9.3% to Rs. 34.44 billion in the quarter under view from Rs. 31.50 billion in the previous year, on the back of an increase in the average price of products, despite a drop in volumes by 4% YoY.
However, the cost of sales increased by 15.33% to Rs. 33.32 billion as compared with Rs. 28.89 billion in the same period of the last year which brought down the gross profit to Rs. 1.11 billion, down by a massive 57.50% as compared with Rs. 2.61 billion.
The decline in profitability was due to an increase in the cost of doing business amidst rupee devaluation; however, the impact was gradually passed on to the consumers, according to Topline Securities.
| 1st Quarter 2019 Volumes | |||
| Models | 1QCY19 | 1QCY18 | Difference |
| Swift | 1101 | 1452 | -24.17% |
| Cultus | 6281 | 6123 | 2.58% |
| Wagon R | 8501 | 6630 | 28.22% |
| Mehran | 9576 | 12583 | -24% |
| Bolan | 5398 | 5779 | -6.60% |
| Ravi | 5555 | 5503 | 0.94% |
| Total | 36412 | 38070 | -4.36% |
A notable decline was witnessed in Mehran’s sales, which were down by 24% YoY. It is now being replaced by newly 660cc Alto. Moreover, motorcycle sales increased to 6009 units as compared to 5529 units in the same period last year.
There was a 5.5x surge in finance cost due to increase in debt borrowings and an increase in interest rates. Lower customer deposits forced the company to rely on borrowings to finance its working capital requirements, which resulted in a massive increase of 345.6% to Rs. 326 million in finance cost against Rs. 73.34 million in the same period the previous year.
Administrative cost increased to Rs. 626 million, while other income of the company decreased to Rs. 49.81 million from Rs. 176 million.
The unfavorable movement in the exchange rate and rising commodity prices with regulatory changes and increased competition from existing and new players can further dampen the company’s future outlook.
The company reported a loss per share of Rs. 11.92 from earnings per share of Rs. 10.99 as compared with the previous year. PSMC’s script at the bourse closed at Rs. 248.3, down by Rs. 12.57 or -4.82% with a turnover of 751,100 shares on Tuesday.
 announced its financial results for the first quarter of 2019, ending on 31st March, reporting a loss of Rs. 980 million.){kind=link}