Continuing to enjoy its positive momentum, Atlas Honda Cars Ltd (HCAR) posted net earnings of Rs630 million for the first quarter ended June 30, 2014. Thats a whopping 92 percent increase compared with the corresponding period of last year. The company has also had a rewarding period, recording highest numbers in sales and margins. EPS for the period stood at Rs4.41 compared to Rs2.29 for the quarter last year.
With a corresponding decline for Toyota Corolla in the 1,300cc and above category, HCARs market share has also witnessed an increase, now at 48 percent for the quarter compared with 36 percent last year. Annually too, HCARs market share had risen to 40 percent in 2014 from 35 percent the previous year. The drop in the market share of Corolla has mostly been attributed to anticipation for their new model this year.
While administrative expenses have risen sharply by 57.31 percent in the period under review, there has also been a significant decline of 82 percent in finance cost. Similarly, there has been an 11 percent increase in other operating income matched by a 19.2 percent decline in other operating expenses.
With a 3.5 percent year-on-year increase in sales, gross margin rose from 7.6 percent to 12.6 percent this year, while net margin registered increased from three percent to 5.58 percent. Higher sales resulted from an increase in volumes, up by 6.22 percent for HCAR during the quarter, compared with a 41 percent decline for Toyota Corolla during the same period.
While HCAR had been facing difficulties over the last couple of years to overcome financial crises, improvements were achieved during the outgoing year through efforts to increase capacity utilisation and cost rationalisation, leading to higher sales and margins. However, volume sales have also benefited as Toyota is set to clear inventories before the launch of their new model. With new competition in the market, HCAR might want to fasten its seatbelts to go toe-to-toe with its rival.


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Atlas Honda Cars - Financials (Apr-Jun)
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Rs (mn) 2014 2013 chg
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Sales 11285 10906 3%
Cost of sales -9855 -10079 -2%
Gross profit 1430 827 73%
Distribution & marketing costs -75 -75 0%
Administrative expenses -70 -44 57%
Other operating income -92 -83 12%
Other operating expenses -101 -125 -19%
Profit from operations 1277 667 92%
Finance cost -2 -14 -82%
Profit before taxation 1274 653 95%
Taxation -644 -325 98%
Profit after taxation 630 328 92%
EPS (Rs) 4.41 2.29
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Source: Company reports

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