Pak Suzuki Motor Company’s loss fell 45.6% to Rs1.6 billion in the year ended December 31, 2020 owing to a surge in other income coupled with a tax reversal.
According to a notice sent to the Pakistan Stock Exchange on Monday, the company had reported a loss of Rs2.9 billion in 2019.
Accordingly, the loss per share fell from Rs35.49 in 2019 to Rs19.31 in 2020.
Net sales of the car manufacturer decreased from Rs116.5 billion in 2019 to Rs76.7 billion in 2020, a contraction of 34%.
In a report, Arif Habib Limited analyst Arsalan Hanif stated that net sales dropped in CY20 due to a volumetric decline of 47% in the units sold. He pointed out that the carmaker dispatched 59,052 units in 2020 against 111,543 units in 2019.
Despite a drastic drop in sales, gross profit of the firm came in at Rs3.3 billion last year, which was 66% higher than the Rs1.98 billion recorded in 2019.
“Margins increased to 4.3%, up by 260bps year-on-year compared to 1.70% in CY19,” he said. “The increase in margins came on account of higher vehicle prices.”
Distribution and marketing expenses of the automobile company fell 35.4% to Rs1.6 billion in 2020.
Similarly, administrative expenses dropped 29.8% from Rs2.5 billion in 2019 to Rs1.8 billion in 2020.
On the other hand, other income soared 216.57% on a year-on-year basis. Receipts under the head were recorded at Rs704.4 million in 2020 compared to Rs222.5 million in 2019.
Hanif said that the other income increased due to exchange gains and a surge in advances from customers.
Finance cost of the firm rose from Rs2.1 billion in 2019 to Rs2.7 billion in 2020.
“Finance cost of the company jumped up by 28% year-on-year owing to a rise in borrowings to meet working capital requirements,” he said.
He added that the company recorded a tax reversal of Rs596 million in CY20 compared to the tax reversal of Rs2 billion in the same period of last year.
During the day, the share price of Pak Suzuki Motor Company increased Rs10.32 to stand at Rs274.12 with 961,600 shares changing hands at the Pakistan Stock Exchange.
According to an Arif Habib Limited report, the company posted a significant profit after tax of Rs1 billion in the fourth quarter of 2020 compared to a loss of Rs234 million in the final quarter of 2019.
Published in The Express Tribune, March 23rd, 2021.
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