Analysts expected Pakistan Suzuki Motor Company (PSMC) to post solid top line growth in its result, released on Thursday and the Company did not disappoint. In effect, PSMC is off to a speeding start this year and the expansion in its top line is enough to put FMCGs to shame. The Companys sales revenue shot up by a whopping 49 percent from Rs.12.57 billion during 1QCY11 to Rs.18.77 billion in 1QCY12. There are two reasons behind this stellar growth. First, car sales have jumped up to over 30,000 units; thanks largely to the Punjab governments taxi scheme. Company officials also point out that improving conditions in agriculture sector have also prompted sales of pickups. Secondly, car prices have also been notched up by an average of about 13 percent compared to the same period of last year. Growth in the cost of sales was tamed below the corresponding growth in sales, helping PSMC boost its gross margin to 5 percent in the outgoing quarter, compared to 3 percent in 1QCY11. A slight decline of 4 percent has been recorded in the Companys other operating income because slight reduction in the discount rate has led to lower rate of return on bank deposits. The easing of import restrictions for used cars had been viewed as a red flag for auto assemblers in the country. However, so far the financial performance of not just PSMC, but also its competitors belies that warning.
============================================ Pakistan Suzuki Motor Company ============================================ Rs(mn) 1QCY12 1QCY11 Chg ============================================ Revenue 18765 12570 49% Cost of sales 17786 12227 45% Gross profit 978 343 185% Gross margin 5% 3% N/A Administrative cost 193 162 19% Other operating income 127 132 -4% PAT 589 91 547% EPS(Rs) 7.15 1.11 544% ============================================
Source: Company announcement
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