Indus Motor profit falls 62pc on higher cost of production

KARACHI: Indus Motor Company Limited, one of the top auto manufacturers in Pakistan, on Wednesday reported a 62 percent drop in its nine-month net profit, owing to a decrease in its sales and an increase in the cost of production.

Net profit for the July-March period declined to Rs5.843 billion from Rs15.292 billion the previous year, a notice to the Pakistan Stock Exchange (PSX) said.

The company also announced an interim cash dividend of Rs24.40/share for the quarter ended March 31, 2023, which is in addition to the already paid interim cash dividend of Rs18.40/share.

Earnings per share (EPS) came in at Rs74.35/share, compared with Rs194.56/share last year.

The company said its revenue for the year dropped to Rs135.032 billion, compared with Rs203.407 billion a year earlier. Cost of sales remained at 134.835 billion from Rs185.839 billion during the same period last year.

Other income for the period rose to Rs11.653 billion, compared with Rs7.732 billion the previous year, which slightly improved profits.

For the quarter ended March 31, the company posted a net profit of Rs3.216 billion from Rs5.117 billion during the corresponding period of 2022. The EPS for the quarter remained at Rs40.92 against Rs65.11.

Brokerage Arif Habib Ltd said the increase in profit on a sequential basis can be attributed to an improvement in gross margins (+730bps QoQ), which resulted in an operating profit after two consecutive quarterly operating losses during FY23.

The company in a statement said, “The decline in net profit was mainly due to lower completely knocked down (CKD) and completely built units (CBU) sales volume, and an increase in input costs mainly on account of severe PKR devaluation against USD and the rising costs of production.”

The net operational loss was off-set mainly by higher other income owing to higher interest rates.

IMC Chief Executive Ali Asghar Jamali said, “We’ve been sailing through rough seas since the beginning of the year with the economy continuing to bend under the weight of skyrocketing inflation and devaluation of the PKR, depleting forex reserves and high interest cost.”

The third quarter too has adversely affected the auto industry; frequent shutdowns forcing it to operate at less than 50 percent production capacity as a consequence of continuing import restrictions, which in turn has resulted in deteriorating consumer demand and expected to continue going forward, he added.

FFBL posts losses on higher cost of sales

Fauji Fertilizer Bin Qasim Limited (FFBL) has reported over four billion loss in its quarter earnings, due to an increase in the cost of sales.

In a statement to the PSX, the company reported a net loss of Rs4.634 billion for the quarter ended March 31, down from profit of Rs3.201 billion during the same quarter last year.

The company skipped any payout for the reported period.

Losses per share (LPS) came in at Rs3.76, compared with EPS of Rs2.47 a year ago.

The company said its sales for the quarter rose to Rs39.741 billion, compared with Rs28.953 billion a year earlier; however, the cost of sales also increased to Rs34.604 billion from Rs22.008 billion in the same period last year. Analyst Taimur Afzal of AKD Securities in his note said, “The result is well below industry expectations owing to substantial exchange losses recorded against foreign trade payables.”

Revenue for the quarter increased 27 percent year-on-year on the back of higher product prices, while declining by a whopping 52 percent quarter-on-quarter, as off take has nearly halved compared to Q4CY22, Afzal added.

Analyst Akshay Thakur of Ismail Iqbal Securities in his note said, “The loss is higher than our estimate 2.1/sh, where the deviation mainly came from lower than expected gross margins and higher than expected exchange losses during the quarter.”

Kapco’s Q3 profit declines 74 percent

Kot Addu Power Company Limited (Kapco) reported a 74 percent decrease in its third quarter net profit, due to an increase in the cost of sales.

In a statement to the PSX, the company reported a net profit of Rs689.004 million for the quarter ended March 31, down from Rs2.619 billion during the same quarter last year.

The company skipped any payout for the reported period.

EPS came in at Re0.78, compared with Rs2.98 a year ago.

The company said its sales for the quarter dropped to Rs128.450 million, compared with Rs23.356 billion a year earlier. The cost of sales also remained at Rs909.191 billion from Rs21.065 billion.

Other income of the company increased to Rs3.886 billion for the quarter against Rs2.569 billion during the same quarter last year.

For the nine-month period that ended March 31, the company reported a net profit of Rs3.874 billion from Rs8.227 billion. EPS for the period remained at Rs4.40 compared with Rs9.35 in the same period last year.

Arif Habib Limited in its alert said the decline in earnings was because of completion of the power purchase agreement (PPA) on October 24, 2022. “However, NEPRA has renewed the company’s generation license till September 24, 2024. The company has also submitted an application for a reference generation tariff and is waiting for a positive response for the regulator,” it added.

During Q3, net sales of the company dipped to Rs128 million. “The decline in sales was witnessed given the completion of PPA on October 24, 2022 with the plant being inoperative since then,” it noted.

Philip Morris’ Q1 profit down 67pc

Philip Morris (Pakistan) Limited reported a 67 percent decrease in its first quarter net profit, due to an increase in the cost of sales.

In a bourse filing, the company reported a net profit of Rs379.342 million for the quarter ended March 31, down from Rs1.149 billion during the same quarter last year.

The company skipped any payout for the reported period.

Diluted EPS came in at Rs4.59, compared with Rs15.03 a year ago.

Net turnover for the quarter rose to Rs5.821 billion, compared with Rs5.345 billion a year earlier. The cost of sales also remained higher at Rs3.505 billion from Rs3.030 billion.

The company in a statement said that during the quarter, the company reported a total net turnover increase of 8.9 percent against the same period last year driven by tobacco exports of Rs2.365 billion, ($9.7 million), reflecting an increase of more than 100 percent due to delay in exports from last quarter of 2022.

Domestic net turnover of Rs3.456 billion reflects a significant decrease of 23.1 percent against the same period last year driven by the massive decline in volumes by 44 percent against Q12022 due to an excise hike in February 2023, the statement said.

Philip Morris Pakistan Managing Director Roman Yazbeck said, “At Philip Morris Pakistan, we believe that a robust collaboration between tax-paid industry and the government is critical to address the issue of the non-tax-paid (illicit) tobacco trade.”

He urged the government to ensure across-the-board implementation of the track and trace system for the tobacco industry and take immediate and effective enforcement action against the non-tax-paid illicit tobacco sector. This, he added would help the government achieve its revenue targets and also provide an even level playing field to the compliant tax paid tobacco sector.

“The excessive increase in FED is likely to lead to shortfalls in government revenue as more adult smokers may shift from the tax-paid sector to the non-tax-paid sector,” Yazbeck added.