Pak Suzuki Motor Company Limited (PSMCL) has reported a substantial net loss of Rs9.68 billion for the fiscal year that ended on June 30, 2023. The loss was attributed to import restrictions and weakened demand, causing a significant increase compared to last year’s Rs17.238 million loss.
The drop in sales was due to operational disruptions caused by inventory shortages. The loss per share (LPS) reached Rs117.58 for this year, a stark contrast to the Rs0.21 LPS recorded from January to June 2022. Despite these challenges, the cost of sales remained stable at Rs39.037 billion, compared to Rs108.415 billion the previous year.
Financial expenses surged to Rs10.141 billion from Rs1.842 billion last year, contributing to the increased losses. However, the company did manage to achieve a Rs3.238 billion profit for the quarter ending on June 30, a significant improvement from the Rs442.989 million recorded during the same quarter the previous year. Earnings per share for this quarter were Rs39.36, compared to Rs5.38 per share in the previous year.
Experts noted that the second-quarter results exceeded expectations due to increased gross margins from car price hikes. The company also gained from finance income of Rs2.6 billion due to exchange rate gains.
During this time, the company’s revenue dropped by 67 per cent year-on-year and 2 per cent quarter-on-quarter due to lower sales volume caused by disruptions in raw material supply and reduced demand. Despite challenges, the company achieved a 10 per cent gross profit margin in 2QCY23, a significant increase from 4 per cent the previous year.
According to The News, the auto sector faces challenges like obtaining Letters of Credit (LCs) for imports and sluggish demand due to high prices and interest rates. Car sales declined 57 per cent year-on-year in the first month of fiscal year 2023–24, as reported by the Pakistan Automotive Manufacturers Association (PAMA). PAMA-registered car manufacturers sold only 5,092 units in July, a 16 per cent decrease from the previous month.
Despite the challenges faced by Pakistan’s auto industry, including low sales and various disruptions, it’s worth noting that car prices in the country remain at their highest point.