Karachi, Pak Suzuki Motor Company Ltd. (PSMC) unveiled its financial results for 3QCY23, reflecting a noteworthy surge in profits. According to the details provided by AKD Securities Limited, the auto manufacturer reported earnings of PkR3.8bn (PkR46.2 per share), marking a 17% increase from PkR3.2bn (EPS: PkR39.4) in the previous quarter. The elevation in earnings is credited mainly to enhanced gross margins and a reduced effective tax rate for the recent quarter.
The company’s topline registered a significant rise, touching PkR29.9bn, a 40% hike from the previous quarter. This is largely due to a boost in sales volumes, with the company selling 10.4k units in this quarter in contrast to the 7.4k units sold in 2QCY23.
A key highlight is the improvement in gross margins, which reached 14.2% for the quarter, up from the 10.1% in 2QCY23. This upward shift is attributed to the full realization of the last price hike, coupled with a drop in CRC prices and a favourable exchange rate shift of the Pakistani Rupee against the Japanese Yen.
However, distribution expenses soared to PkR600mn, marking a 147% quarterly increase. This escalation is primarily due to increased transportation costs linked with elevated sales volumes and augmented marketing expenditure in the face of rising competition.
On the financial side, the company reported a negative figure of PkR-145mn, suggesting a possible reversal of an exchange loss. A clear understanding of this aspect is yet to be obtained. Additionally, other income remained stable at PkR761mn for the quarter, even though it experienced a 29% year-on-year drop.
The quarter also saw a significant reduction in taxation, amounting to PkR309mn, reflecting an effective tax rate of 7.5%, a stark contrast from the 28.1% in the preceding quarter. The dip in taxation might be the result of the company leveraging deferred-tax assets during this period.
However, the cumulative figures for the first nine months show the company incurring a loss of PkR5.9bn, chiefly attributed to a hefty finance cost of PkR12.8bn accrued in 1QCY23.
In a significant development, the company’s board, in their latest meeting, approved the voluntary delisting of PSMC.
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