Pak Suzuki Motor Company Limited, which is the largest player in Pakistan’s automobile industry, has announced its financial results for the year that ended December 31st, 2020.
The company reported a loss of Rs. 1.58 billion on the back of a reduction in its revenues and lower cost of sales. The car manufacturing firm had booked a loss of Rs. 2.92 billion in 2019, according to a notice sent to the Pakistan Stock Exchange (PSX). This is a reduction of 46 percent in the loss as compared to the same period last year.
However, during the last quarter of 2020, the company posted a profit of Rs. 1 billion compared to a loss of Rs. 234 million in the same quarter last year. Pak Suzuki has reported a profitable quarter for the first time after reporting an 8th consecutive quarter loss. The increase in profitability in the last quarter was mainly driven by volumetric growth in sales as it sold 20,451 units and rupee appreciation, which was up by 3.82 percent QoQ.
During the year, the company reported a 34 percent decline in revenues, which stood at Rs. 76.72 billion as compared with Rs. 116.54 billion in 2019. The drop in revenues was due to a 46.11 percent year-on-year drop in vehicle sales owing to the COVID-19 pandemic and stiff competition from other market players.
The cost of sales also decreased by 36 percent to Rs. 73.41 billion as compared to Rs. 114.56 billion.
It is worth mentioning that Mehran was discontinued by Suzuki and was replaced by Alto in June 2019.
Distribution and administration costs dropped by 35 percent and 30 percent year-on-year, respectively.
Suzuki saw a 28 percent increase in finance cost to Rs. 2.66 billion as compared to Rs. 2.08 billion. With the number of bookings increasing, the company reported an increase of 217 percent in other income. It was reported at Rs. 704 million as compared to Rs. 222.50 million in 2019.
Loss per share during the year decreased to Rs. 19.31 from a loss per share of Rs. 35.49. PSMC’s scrip at the bourse was closed at Rs. 274.12, up by Rs. 10.32 or 3.91%, with a turnover of 961,600 shares on Monday.
2020 was a tumultuous year for the entire automotive industry of Pakistan due to the pandemic-induced slump in trade and other business activities. However, it seems to have catapulted the demand for vehicles to an unprecedented height, hence the lessening of losses for the automaker in the aforementioned period.
The recent case-in-point is the significant amount of increase in sales that PSMC recorded in January and February of 2021. Plus, with the new Suzuki Swift possibly on the way this year, there is a likelihood the sales and the revenue of PSMC would leap even higher.