PSMC earnings nosedived by 66% YoY

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Pak Suzuki Motor Company Limited (PSMC) announced its CY18 financial results today where the company declared earnings of PKR 1,298mn (EPS: PKR 15.77), down by 66% YoY. On a quarterly basis, the company posted a loss after tax of PKR 94mn (LPS: PKR 1.15) during 4QCY18 compared to PKR 729mn (EPS: PKR 8.86) in 4QCY17 and PKR 95mn (EPS: PKR 1.15) in 3QCY18, respectively.

Along with the result, the company announced a cash dividend of PKR 3.16/share compared to PKR 18.60/share in SPLY.

Net sales of the company grew by 18% YoY to PKR 120bn in CY18 due to volumetric growth of 5% YoY to 138,003 units vs 130,813 units in SPLY along with multiple increase in car prices by an average of 10-15% YoY.

During 4QCY18, net sales of the company increased by 6% YoY and 16% QoQ owing to decline in overall sales volumes by 8% YoY being offset by higher prices while volumetric jump on a QoQ basis by 14% to 33,679 units aided topline.

Margins deteriorated to 5.88%, down by 360bps YoY as compared to 9.48% in CY18. The decline came on account of currency depreciation of 21% YoY eroding margins as company was unable to pass on the impact of currency and higher duties on imported raw material.

Other income decreased by 35% YoY to PKR 566mn due to reduction in bank balances and advances from customers.

Finance cost of the company jumped up by 432% YoY to PKR 363mn owed to rise in borrowings to meet working capital requirement.

Effective taxation was recorded at 37.7% in CY18 compared to 31.9% in SPLY.