Honda Atlas Cars Limited (HCAR) has reported a substantial profit after tax of Rs. 675 million for the quarter ending September 30, 2023. This marks a rebound from the loss of Rs. 385 million recorded in the same period of the previous year. The announcement has caught the attention of industry analysts and consumers alike.
Despite facing a considerable 28.6 percent drop in sales year-on-year, with quarterly revenues plummeting to Rs. 13.9 billion from the previous year’s Rs. 19.5 billion, Honda Pakistan has managed to pull off a remarkable financial comeback. The company’s half-year top line also witnessed a decline, standing at Rs. 17.7 billion, which is a 64 percent decrease on a year-on-year basis.
The impressive profit surge has been attributed to improved margins, which saw a dramatic increase of 750 basis points year-over-year. During the second quarter, Honda Atlas Cars sold 2,510 units, marking a more than fourfold increase quarter-over-quarter, thanks to the absence of non-operating days and successful deliveries during this period.
A closer look at the financial details reveals that the company’s gross profit soared by 127 percent year-on-year to Rs. 1.52 billion, up from Rs. 673 million in the same period last year. The gross margin for the quarter was reported at 10.9 percent, showing a notable improvement from the 3.4 percent gross margins posted previously. Analysts from Arif Habib Limited suggest that the augmented car prices, along with a dip in commodity prices, particularly steel, played a pivotal role in bolstering the company’s financial health.
Moreover, Honda Pakistan managed to reduce its distribution and marketing costs slightly to Rs. 212 million, down from Rs. 216 million in the same quarter of the previous year. Other income for the company also increased by 14 percent to Rs. 896 million, thanks to an uptick in short-term investments. However, the finance cost of the company skyrocketed by 191 percent, reaching Rs. 120 million during the quarter under review.
Despite not announcing any dividend payouts for the period, the company’s earnings per share (EPS) stood at Rs. 4.73, a stark contrast to the loss per share of Rs. 2.7 in the same period last year. On the trading front, HCAR’s scrip at the bourse closed at Rs. 198.05, up by 7.5 percent or Rs. 13.82, with a turnover of 2.3 million shares on Wednesday.
