Honda Atlas Cars reported a 43% spike in profit that stood at Rs939.2 million in the quarter ended September 30, 2021 owing to a massive jump in other income.
According to the financial results sent by the company to the Pakistan Stock Exchange on Wednesday, the carmaker had announced an after-tax profit of Rs656.9 million in the corresponding quarter of previous year.
Earnings per share of the firm rose from Rs4.6 in July-September 2020 to Rs6.58 in July-September 2021.
During the quarter under review, net sales amounted to Rs25.98 billion, which was 27.2% higher than the Rs20.4 billion recorded in the same quarter of previous year.
In a report, Ismail Iqbal Securities analyst Muqeet Naeem said that the increase in topline of the company was led by the volumetric growth and price revision for new City variants.
“The result is below our expectations, where the deviation mainly stemmed from lower-than-estimated gross margins,” he said.
Distribution and marketing cost of the company increased from Rs150.7 million in the July-September quarter of 2020 to Rs212.95 million in the same quarter of 2021, a rise of 41.3%.
Similarly, administrative expenses grew 42.21% as they rose from Rs191.7 million in July-September 2020 to Rs272.6 million in the quarter under review.
Other income skyrocketed 678% to Rs516.3 million in the quarter ended September 2021. The carmaker had received Rs66.3 million under the head in the same quarter of 2020.
Other income rose likely due to higher advances from customers for the booking of City variants, Naeem said.
Other expenses soared from Rs25.2 million in July-September 2020 to Rs343.8 million in July-September 2021.
Finance cost rose 60% to Rs28.1 million in July-September 2021 compared to Rs17.5 million in the same quarter of previous year.
Effective tax rate came in at 35.1% during the quarter under review.
During the day, the share price of Honda Atlas Cars fell Rs4.66 to close at Rs218.17 with 223,500 shares changing hands at the Pakistan Stock Exchange.
Published in The Express Tribune, November 18th, 2021.