LAHORE: Pak Suzuki Motor Company (PSMC) released its half yearly financials on Thursday, according to which the company ended the second quarter of 2022 with a profit of PKR443 million compared to its loss of PKR460 million in the last quarter. Its cumulative loss for this year now stands at PKR17 million.
The most notable quarter-on-quarter (QoQ) gain for PSMC was its 36% increase in sales revenue and an increase in its gross profit margin (GPM) to 4.41% from the previous 2.83%. These increases can be attributed to the greater sales volume PSMC experienced across all product segments. PSMC’s overall sales increased by 10% from 46,379 units to 51,013 units QoQ based on figures released by the Pakistan Automotive Manufacturers Association (PAMA).
AKD Securities attributes the increase in the GPM to PSMC’s launch of the new Suzuki Swift which AKD believes yielded higher margins than the rest of PSMC’s portfolio.
Furthermore, the higher sales revenue and the higher gpm may be attributed to the two price increases that PSMC introduced for both its automobiles and motorcycles. Automobile prices, with the exception of the air conditioned variant of the Suzuki Bolan and the Deckless variant of the Suzuki Ravi, were on average 15% higher in the second quarter than they were in the first quarter of the year. The prices for PSMC’s motorcycles were on average 7.35% higher in the second quarter than they were in the first quarter of the year. These price increases were aimed to hedge against the PKR’s depreciation, which lost 11% of its value over the course of the second quarter.
PSMC’s other income also rose by 97% from PKR 527 million to PKR 1 billion. This increase is likely a result of PSMC benefitting from the progressive interest rate hikes as the majority of their other income, based on their financial reports, is centered on short-term deposits. Finally, PSMC’s financials indicate the ramifications of the imposition of the Super Tax with its effective tax rate coming in at 68% in the second quarter in comparison to the first quarter’s 29%.
PSMC’s outlook this (third) quarter, however, does not seem as bright as the outgoing quarter. This is on account of the State Bank of Pakistan’s (SBP) increased oversight of completely-knocked-down (CKD) kits, its periodic non-productive days over the summer, and finally PSMC’s sales figures for July. PSMC may benefit from the higher duties the Government of Pakistan has levied on imported vehicles as consumer spending may be redirected away from imported vehicles towards some of PSMC’s offerings.
