In the quarter ended on 30th September 2020, the profit of Honda Atlas Cars (Pakistan) jumped 29% to Rs 657 million. Earnings of Honda Atlas cars in Pakistan have jumped 29 percent on the back of a spike in sales coupled with a sharply lower finance cost.
Moreover, net sales of the company soared 75.4% to Rs 20.4 billion in the quarter under review as opposed to Rs 11.6 billion in the corresponding quarter of 2019. This recovery in earnings specifically came on the back of an increase in unit sales by 67% year-on-year and 219% quarter-on-quarter in the second quarter of FY21, as per the statement of analysts.
On Wednesday, the company sent a notice to the Pakistan Stock exchange where the carmaker reported a profit worth Rs 509.7 million in the same quarter of 2019. Accordingly, earnings per share of the company for the July-Sept 2020 quarter came in at Rs 4.6 compared to Rs 3.57 in the same quarter of the previous year.
Topline Securities analyst Fawad Basir said, “The Company recovered from the loss of Rs 511 million in the first quarter of FY21 to a profit of Rs 657 million in the second quarter. The result is above the industry’s expectations mainly due to higher-than-expected gross margins and lower finance cost.”
The major reason behind this profit is a surge in sales with lower finance costs incurred by Honda Atlas. The data shows the company’s sales bounced back by 67%. As per Topline Securities, the sales have increased due to ease in COVID-19 restrictions and low-interest rates.
The analyst further pointed out that the other income of the company amounted to Rs 66.3 million, up 163.7% compared to Rs 25.1 million in the same quarter of last year.
JS Global analyst Ahmed Lakhani said, “Additionally, finance cost dropped amid a significantly deleveraged balance sheet in the latest quarter,” he added.
The above data shows significant improvement for Honda; however, the company has not performed as well as Toyota Indus Motors. The reason behind the difference is the sale of the Toyota Yaris, which are sold more than Honda City and Civic combined.