LAHORE: Toyota Indus Motor Company, the maker of Toyota automobiles in Pakistan, released their earnings for Q1FY23 to the Pakistan Stock Exchange on Friday. The company has started the year with its Q1FY23 earnings at Rs1.29 billion. This amounts to complete collapse in its year-on-year (YoY) profits, as this is 76 per cent less than the company’s Rs5.42 billion in Q1FY22.Â
Toyota’s total sales revenue for Q1FY23 fell 43 per cent YoY as the recorded sales of Rs37.24 billion in comparison to Q1FY22’s Rs65.5 billion.
The reduction in sales revenue is due to the company’s reduced sales volume. The company sold 8,868 vehicles in Q1FY23 in comparison to the 18,464 units the previous year in Q1FY22. This amounts to 52 percent reduction amounting to a total of 9,778 fewer vehicles sold.
The silver lining to Toyota’s woes is that it was able to increase the share of its Fortuner and IMVs sales to total sales whereby these two now account for 28 per cent of total sales, in comparison to 26 per cent last year.Â
The fall in sales can be attributed to the myriad of problems, such as non-production days, inflation, and selective availability of certain vehicles, that plague the entire industry currently. However, one reason for the sheer scale of Toyota’s dip is that the company introduced its refund program in July of this year. Now Toyota has not revealed the true number of refunds that it has given to customers, however, if the revenue figures are anything to go by, then these refunds are likely to have been sizable. Â
The company’s cost of sales subsequently also reduced by 32 per cent YoY due to the reduced trading activity. However, this was not enough of a reduction for the company as it recorded a negative gross profit of Rs2.3 billion.Â
Perhaps the most significant change in Toyota’s financial earnings is the 152 per cent increase in Toyota’s other income which grew from Rs2 billion in Q1FY22 to Rs5.16 billion in Q1FY23. Toyota’s quarterly financials do not reveal the make-up of its other income.
However, its other income elucidates upon how these are the gains that Toyota makes from engaging in investment activities. Toyota actually made Rs8 billion more from investments than it did from its operations as its earnings from its operations have recorded a loss of Rs3.3 billion.
In essence, the only money Toyota made in Q1FY23 was from behaving like a bank and not as a car company. In fact, behaving as a car company actually led to Toyota incurring losses. This is a far cry from its Q1FY22 figures where its other income only accounted for 36 per cent of its EBIT. Finally, Toyota ends the year with a profit of Rs1.29 billion which is a 76 per cent reduction from the Rs5.4 billion it saw last year over the same period.Â
Looking at the quarter ahead, it is likely that Toyota will fare similarly, if not worse. This is because of the persistent issue that Toyota has faced in regards to importing completely-knocked-down (CKD) kits due to the State Bank of Pakistan’s (SBP) administrative oversight of these imports. This will be alongside the aforementioned numerous problems already plaguing the industry. However, a notable disadvantage unique to Toyota is the ramifications of the flooding over the past few months across Pakistan. Rural areas form key markets for Toyota due to its market penetration relative to its competitors. Subsequently, reduced purchasing power in these key markets is likely to hurt Toyota more so than its competitors.Â
Furthermore, contraction in sales volume will also reduce the availability of investable funds Toyota has access to. Therefore, one or two quarters with similar sales revenues, and Toyota may start to record net losses similar to Suzuki.
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Automobile Industries are on verge of Collapse due to present Government bad policies.. Government must immediately remove restrictions on import and Bank financing otherwise Automobile Industry know as Mother of Industries, paying Huge amount of Taxes to Government will Closed down soon, thousands of people associated to it will suffer.
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