KARACHI: Honda Atlas Cars (HCAR) has posted a profit of Rs1.050 billion in its first quarter result for the period of April-June 2018 compared to Rs2.086 billion in the same period last year.
The company reported its April to June 2018 earnings at Rs7.4 per share compared to Rs14.6 per share in the same period last year, down 50 per cent YoY, as gross profit margins dropped significantly.
Company net sales rose by 13 per cent YoY due to price hikes third time since December 2017 as well as 13 per cent YoY growth in volumes. Volumetric growth was led by Civic and City models, up by 21 per cent YoY, while sales of BR-V declined 19 per cent YoY.
Cost of sales outpaced net sales growth, rising by 20 per cent YoY in April-June 2018. Resultantly, gross margins contracted by 5.2 percentage points YoY to 9.0 per cent in the said period.
Topline Securities Analyst Syed Daniyal Adil attributes deterioration in gross margins to increase in raw material cost and approximately 15 per cent depreciation of Pakistani rupee from December 2017 to June 2018.
Earnings were also dragged down by 28 per cent YoY and 22 per cent YoY increase in distribution and administrative expenses respectively, which is a result of an increase in fixed overhead costs in line with sales. Simultaneously, other operating costs were up 37 per cent YoY which is primarily due to exchange losses, the analyst claimed.
On a sequential basis, earnings declined 24 per cent QoQ due to twin effect of volumes decline (-12 per cent ) as well as margin contraction (0.6 percentage points QoQ).
Profitability also reduced by an effective tax rate of 44 per cent as super-tax was booked during the quarter.
Honda Atlas company management is master of earnings concealment. Have been following their financial results since a decade now and the way they hide their income and give profit shocks to investors is a routine.
A really shady company not just because of charging price increases to already booked customers and deteriorating quality standards, but also due to the way they manipulate their stock prices.