As the local bourses remain in a lull, it appears investors are nowadays quick to latch on to any announcement of a sizeable dividend. A similar response was witnessed to the announcement of a full-year dividend of Rs10 per share by Indus Motor Company (INDU), despite a result that failed to impress. INDU posted net profits of Rs2.74 billion in FY11; representing a decline of 20 percent over last year. Still, the company fared slightly better than the expectations of market analysts. AKD Securities analyst Misbah Iqbal had projected that EPS would stand at Rs31.01 per share. She explained that the company faced an effective tax rate of 32 percent against her estimation of a 35 percent rate. During the year, higher car prices boosted the companys net sales to Rs61.7 billion from last years tally of just under Rs60.1 billion in the face of a two percent decline in volumetric sales to 50,015 units. However, persistent increases in input costs and rapid depreciation of the local currency against both the Japanese Yen and the US dollar meant that cost of sales accelerated faster than net sales during FY11. Consequently, the companys gross margins thinned from 8.1 percent in FY10 to 6.6 percent in the outgoing fiscal. Other operating income, which is mostly comprised of earnings on advances received from customers, fell to Rs1.5 billion in FY11, compared to Rs1.8 billion in FY10. A company official explained that "delivery times have reduced compared to the previous year while returns on deposits with banks have also dropped"; thus shaving other income. While INDUs share price touched the upper circuit barrier on Wednesday; the future for this company and the automotive industry as a whole is hanging in the balance; as farmers incomes are expected to remain subdued in the coming months compared to the price bonanza enjoyed by the agri-sector in FY11, auto sales are also seen damp relative to last year. Informed sources also reveal that the government is considering further easing of the age limit for the import of used cars from five years to 10 years. It is also expected that the commercial import of second hand cars will be allowed in the country in the upcoming trade policy. The auto industry as a whole including INDU has vociferously opposed such measures. If passed, the combination of policy measures could pack a hard-hitting combination of punches to local auto assemblers.
========================================================== INDUS MOTORS COMPANY ========================================================== Rs (bn) FY11 FY10 chg ========================================================== Net Sales 61.7 60.09 3% Cost of Sales 57.61 55.24 4% Gross Profit 4.09 4.86 -16% Gross Margin 7% 8% down 150 bps Distribution Expenses 0.69 0.47 47% Administrative Expenses 0.46 0.38 21% Other Operating Income 1.51 1.8 -16% PAT 2.74 3.44 -20% EPS (Rs) 34.9 43.81 ==========================================================
Source: KSE notice
Comments
Comments are closed for this article.