Pak Suzuki Motors bounce back from T2CY22 loss

LAHORE: Pak Suzuki Motor Company (PSMC) released its half-year financial statements on Thursday, that the company ended the second quarter of 2022 with a profit of PKR 443 million compared to its loss of PKR 460 million last quarter. Its cumulative loss for this year now stands at PKR 17 million.

The most notable quarterly gain for PSMC was the 36% increase in revenue and the increase in gross profit margin (GPM) to 4.41% from the previous 2.83%. These increases can be attributed to the higher sales volume recorded by PSMC across all product segments. Overall PSMC sales increased 10% from 46,379 units to 51,013 QoQ units based on The figures published by the Pakistan Automobile Manufacturers Association (PAMA).

AKD Titles attributes the increase in GPM to PSMC’s launch of the new Suzuki Swift which AKD says generated higher margins than the rest of PSMC’s portfolio.

Additionally, the higher revenue and higher gpm can be attributed to the two price increases that PSMC introduced for its automobiles and motorcycles. Automobile prices, except for the air-conditioned variant of the Suzuki Bolan and the Deckless variant of the Suzuki Ravi, were on average 15% higher in the second quarter than they were in the first quarter of the year. PSMC’s motorcycle prices were on average 7.35% higher in the second quarter than in the first quarter of the year. These price increases were intended to hedge against the depreciation of the PKR, which lost 11% of its value during the second quarter.

PSMC’s other revenue also increased by 97%, from PKR 527 million to PKR 1 billion. This increase is likely due to PSMC benefiting from the gradual increases in interest rates, as the majority of their other income, based on their financial reports, is centered on short-term deposits. Finally, PSMC’s financial statements show the ramifications of the imposition of the super tax with its effective tax rate of 68% in the second quarter, compared to 29% in the first quarter.

PSMC’s outlook for this (third) quarter, however, does not look as bright as the previous quarter. It is because of the State Bank of Pakistan (SBP) heightened monitoring of Completely Knocked Down (CKD) kits, its periodic non-productive days over the summer, and finally PSMC’s sales numbers for July. PSMC can benefit from the higher rights the government of Pakistan levied on imported vehicles, as consumer spending may be redirected from imported vehicles to some of PSMC’s offerings.

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