The automobile sector remained under the shadow of Covid-19 as Honda Atlas Cars (HCAR) reported a loss of Rs511 million in the quarter ended June 30, 2020 against profit of Rs241.7 million in the corresponding period of previous year.
Loss per share (LPS) of the company came in at Rs3.58 in the April-June 2020 quarter compared to earnings per share (EPS) of Rs1.69 in the corresponding period of last year, revealed a notice sent by the company to the Pakistan Stock Exchange (PSX) on July 24, according to a report.
“On a quarter-on-quarter basis, the company’s losses accentuated from Rs0.20 per share in the previous quarter,” said Topline Securities’ analyst Hammad Akram. “The result is below market expectations primarily due to higher-than-expected contraction in gross margins and impact of turnover tax.” The company recorded turnover tax of Rs113 million during the quarter. Net sales dipped 63.6% to Rs6.5 billion in the April-June 2020 quarter. The company had recorded sales of Rs17.9 billion in the same quarter last year.
According to the analyst, the drastic decline in earnings came on the back of a 72% drop in unit sales during the period under review against the same period of previous year. “Covid-19-related lockdowns and restrictions reduced unit sales of the company, resulting in a decline in revenues of 64% year-on-year and 58% quarter-on-quarter,” he said.
Arif Habib Limited analyst Arsalan Hanif elaborated that during the April-June quarter, the company sold 2,102 units of Civic and City and 227 units of BR-V model.
Gross profit of the carmaker fell significantly from Rs1.4 billion during the April-June quarter of previous year to Rs54.2 million in the quarter under review, a decrease of 96%.
“Gross profit margins fell to 0.83% in the April-June 2020 quarter as opposed to 11.99% in the same period of previous year,” said Hanif. “The decline in margins came on the back of rupee depreciation coupled with high per-unit fixed cost as the closure of plants due to lockdown resulted in lower production.”