Honda Atlas Cars (Pakistan) Limited (HCAR) reported a nearly 62% drop in profit-after-tax (PAT) for the quarter ending September 30, 2024, compared to the same period last year. The company’s PAT stood at Rs 257.74 million, down from Rs 675.34 million, despite a 19% increase in total sales.
Honda’s sales reached Rs16.59 billion during the quarter, a 19% rise from Rs13.96 billion in the same period last year, though there was a 6% decline from the previous quarter. This decline in profitability was largely due to an increase in the cost of sales, which has impacted margins. However, the company’s gross profit margin has remained around 7.5% over the last two quarters.
The “Other income” section saw a sharp decline of nearly 80%, which was attributed to a decrease in the company’s bank deposits. This is likely due to the monthly fees introduced by banks on high deposits, a factor that has significantly reduced income from bank profits.
In addition, HCAR’s gross profit decreased by 20%, dropping to Rs 1.22 billion from Rs 1.53 billion year-on-year. Gross margins also shrank to 7.35%, down from 10.94%, as a result of a 24% rise in the cost of sales.
Despite these challenges, HCAR saw a 64% increase in the sale of passenger cars and light commercial vehicles (LCVs) in the first four months of fiscal year 2024-25, with nearly 5,000 units sold.
Administrative expenses rose by 14%, amounting to Rs 437.92 million, up from Rs 382.6 million in the same period last year. Other income fell by 91%, dropping to Rs 84.85 million from Rs 896.57 million. Finance costs surged by 61%, reaching Rs 193.3 million, compared to Rs 120.16 million in the previous year.
Despite the significant decline in profitability, HCAR’s strong sales performance continues. The company’s profit before taxation (PBT) also took a hit due to the decreased income, declining by Rs 364.5 million.
