Pak Suzuki Motor Company Limited, which is the largest player in Pakistan’s automobile industry, has announced its financial results for the year ended December 31st, 2019.

The company reported a loss of Rs. 2.92 billion on the back of massive reduction in its sales. The car manufacturing firm had booked a profit of Rs. 1.29 billion in 2018, according to a notice sent to the Pakistan Stock Exchange (PSX) on Friday.

Net sales during the year were recorded at Rs. 116.54 billion, which were down by 2.80% as compared with Rs. 119.85 billion in 2018. The cost of sales of the company inched up by 1.56% to Rs. 114.56 billion as compared to Rs. 112.80 billion. Gross profits dropped by 72.50% to Rs. 1.94 billion compared to Rs. 7.04 billion recorded in 2018.

Rupee devaluation against the US dollar resulted in increased imported material cost, consequently adversely affecting the gross profit margins.

The sales volume during 2019 for cars and light commercial vehicles declined by 16.40% from 133,410 units to 111,543 units.

Mehran has been discontinued by Suzuki and it has been replaced by Alto. The new Alto performed exceptionally well in the depressed market and contributed in lower decline in sales volume and improved market share.

Consequently, higher prices of vehicles have affected the sales volume of the company.

 2019  Volumes 
Models20192018Difference
Swift36776145 -40.16%
Cultus1861521739 -14.37%
Wagon R2107931146 -32.32%
Mehran1685240,828 -58.72%
Bolan1228713985 -12.14%
Alto25343
Ravi1369019567 -30.04%
Total111,543133,410 -16.40%

The company sold over 22,353 units of motorcycles as compared to 29,350 units in the same period last year, down by almost 24% in 2019.

There was a 4.74 times increase in finance cost due to an 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 474.60% to Rs. 2.08 billion in finance cost against Rs. 362 million in 2018.

Administrative cost increased to Rs. 2.52 billion, while other income of the company decreased by 61% to Rs. 222 million from Rs. 565.94 million. The company reported a loss per share of Rs. 35.49 in 2019 as compared with earnings per share of Rs. 15.77 in 2018.

It is pertinent to mention that the company booked a tax credit of Rs. 2.92 billion during the year due to reduction of Deferred Tax Asset. It had reported a loss before tax of Rs. 4.95 billion and after the tax credit, the loss was minimized to Rs. 2.92 billion in 2019.

Lower interest rates to help the Auto Sector move forward

Adnan Sami Sheikh, a senior market analyst noted down that lower commodity prices and lower interest rates may help the auto sector going forward. But he warned that the global automakers are shutting down factories worldwide due to a slowdown in demand. He further added that Ford, General Motors and Fiat Chrysler Automobiles announced that they will suspend all production in the US, Canada and Mexico as they step up to help stop the spread of the coronavirus.

He advised employers should act responsibly and send their workers home to curb the spread of coronavirus.

The post Pak Suzuki Reports a Loss of Rs. 2.92 Billion in 2019 appeared first on .

Originally Published on ProPakistani.com

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