Honda Pakistan Earned 1180% Higher Profit After Tax in H1 2021
Honda Atlas Cars Limited (HCAR) posted an after-tax profit of Rs. 1.86 billion in the half-year ended September 30, 2021, compared to a profit of just Rs. 145.85 million in the same period of last year. This is an increase of 1180.36 percent or 11.8 times as compared to the previous year.
The rebound came primarily due to improved economic activity, stable policy rate, boost in activity after harsh lockdowns amid COVID-19, lower financing rates, and tax relief measures provided by the government.
The sales during the first half soared by 77.30 percent to Rs. 47.74 billion compared to profits of Rs. 26.93 billion recorded in the corresponding period last year due to a recovery in auto sales after the easing of the pandemic-induced lockdowns.
The revenues surged due to the increase in the sales volume to 16,765 units in the first half of the year.
The company reported a gross profit of Rs. 3.38 billion up by 134.75 percent as compared to Rs. 1.44 billion that was posted in the same period last year.
The distribution and marketing expenses were reported at Rs. 345 million as compared to Rs. 331 million. The other income of the company increased by 441.5 percent to Rs. 851.51 million from Rs. 157.25 million due to the increase in the new car bookings.
The financing cost of the company had decreased by 63 percent to Rs. 39.54 million as compared to Rs. 106.87 million during the period.
The company reported earnings per share of Rs. 13.08 as compared to earnings per share of Rs. 1.02.
At the time of filing this report, HCAR’s scrip at the bourse was trading at Rs. 218, down by Rs. 4.83 or 2.17 percent, with a turnover of 166,700 shares on Wednesday.
At the beginning of this quarter, HCAR launched the 6th generation City in Pakistan, which received a tremendous response from car buyers across Pakistan. During September and October of 2021, the company sold north of 3000 vehicles. The high sales figures were achieved due in large part to the sales of the new Honda City.
Recently, however, the prices of all HCAR vehicles were increased significantly due to the appreciation of the US Dollar and an increase in the rates of raw materials and freight charges. The new City now starts from over Rs. 2.7 million and goes up to over Rs. 3.3 million, which makes it the most expensive vehicle in the subcompact sedan segment of Pakistan.
This is important to note because HCAR’s sales are likely to take a hit following the recent price hike, along with its profitability in the next quarter.