Toyota Pakistan Reports 142% Increase in Profit Despite Poor Sales

Toyota Indus Motor Company (IMC) Limited has posted a profit of Rs. 3.21 billion for the quarter that ended on March 31, the financial year 2022-23, down by 37.1 percent as compared to a profit of Rs. 5.11 billion in the same period last year.

Meanwhile, the car maker’s profit increased by 142 percent on a quarter-on-quarter (QoQ) basis, attributed to an improvement of 730 basis points in gross margins which resulted in an operating profit after two consecutive quarterly operating losses in FY22, according to Arif Habib Limited (AHL).

Along with the result, the company has also announced an interim cash dividend of Rs. 24.4 per share.

Net sales of the company decreased by 29 percent to Rs. 48.19 billion as compared to Rs. 68.2 billion primarily due to lower volumetric sales. The company faced additional challenges from massive inflationary pressures that adversely affected consumer purchasing power.

Gross margins returned to the green zone following two consecutive quarters of negative gross margins, arriving at 6.3 percent as against -1.0 percent in the preceding quarter. This can be attributed to multiple price hikes during the quarter by the company to combat cost pressures, according to Ismail Iqbal Securities.

Other income of the company saw a slight dip of 5 percent as it was reported at Rs. 3.03 billion as compared to Rs. 3.18 billion recorded in the same period last year. On a QoQ basis, it fell by 12 percent likely amid a contraction in cash and cash equivalents.

The company booked an effective tax rate of 33.5 percent against the 27.6 percent recorded in 3QFY22.

During the financial year so far, the car maker’s profits have crashed by 62 percent YoY to Rs. 5.84 billion in the first nine months of FY2023. The topline closed in red as well, depicting a 33.6 percent decline from Rs. 203.4 billion in 9MFY22 to Rs. 135 billion in 9MFY23. Meanwhile, the other income of the company jumped by 50.7 percent to Rs. 11.6 billion during the nine-month period.

Toyota IMC posted earnings per share (EPS) of Rs. 40.92 for 3QFY23 and an EPS of Rs. 74.35 for 9MFY23.

At the time of filing, the company’s scrip at the bourse was Rs. 955, up by 3.17 percent or Rs. 29.35, with a turnover of 3,497 shares on Wednesday.

Toyota IMC has been recording strong sales figures, particularly in mid-to-top-tier car segments. In March, Toyota sold 1,912 cars, reporting a 6% MoM increase in sales. The increase can be attributed to the strong Toyota Hilux, Fortuner, and Corolla sales.

The said cars start from over Rs. 6.1 million and go all the way up to Rs. 21 million. Therefore, while the volumetric sales weren’t spectacular, Toyota IMC still maintained a profit due to strong high-end car sales and a better production schedule compared to its key competitors.

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