The automobile giant, Pak Suzuki announced its annual results on Thursday, March 21, 2013. With a volumetric growth of four percent, the top line of PSMC grew by 11 percent YoY in CY12. The first half proved to be eventful for the company with Punjab Yellow Cab Taxi Scheme taking the companys sales volume to the levels last seen in 2008.
The taxi scheme bestowed Suzuki Mehran with the diadem of company's top selling brand, by selling 32,920 units. Suzuki Mehran also thrived being the only available option in the small car segment after the termination of Alto and Cuore. Suzuki Bolan also touted a YoY growth of 23 percent owing to the taxi scheme.
Followed by an exciting first half, the second half of the year started on a grim note. The imposition of Euro-II compliance led to the discontinuation of Suzuki Alto, leading to a massive 27 percent cut in the sales volume of that brand.
With the entire sector taking the brunt of used imported cars, PSMC is no exception. However, the impact of used imported cars was felt more awfully in the absence of the taxi scheme in the 2HCY12. Besides, a significant hike in car prices over the year also took its toll on the companys sales volume. The sales volume of Suzuki Liana, witnessed a momentous plunge of 25 percent YoY partly attributable to 10 percent rise in its prices over the year.
Suzuki Cultus, the only locally manufactured car in 1000cc category remained immune from the headwinds, posting almost the similar sales volume as it did in CY11. Suzuki Swift also boasted a YoY growth of 18 percent in its sales volume.
Increase in prices coupled with weakening Yen against the local currency and subdued steel prices greatly buttressed the company's margins. During the year, PSMC posted a gross margin of four percent against 3.5 percent last year.
The company derives a significant portion of its other income from profit on bank deposits and customer advances. However, due to low interest rate backdrop throughout the year and decline in new car registration trend in the second half of the year, the other income of PSMC dived by 30 percent.
Nevertheless, the drop in other income and the inflationary rise in the company's operating expenses couldn't hurt the companys bottom line garnering significant sustenance from the healthy top line. Thus, during the year, the bottom line of PSMC posted a YoY growth of 23 percent.
Going forward, the auto industry fortune hinges on prudent regulatory decisions. ECC reduced the age limit of used imported cars from five years to three years in December however, its impact couldn't be materialised until after January as the customs authority kept releasing the cars imported before the decision.
With the recent amnesty scheme to legalise smuggled cars giving tough time to the industry, CCP in an effort to boost competition and improve the quality, is asserting the government to call off the reduction in the age limit of used imported cars, remove the entry barriers by lowering the tariffs and reconsider the depreciation of imported cars.
Amid so many issues cooking among the authorities, the industry is keeping its fingers crossed until the implementation of AIDP-II.
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Pak Suzuki Motor Co. Ltd.
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Rs. In mm chg 2012 2011
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Sales 11% 58,531.14 52,718.563
Cost of sales 10% 56,185.40 50,849.153
Gross (loss) / profit 25% 2,345.740 1,869.410
Distribution and marketing costs 35% 356.96 263.651
Administrative expenses 17% 860.75 735.935
30% 1,128.027 869.824
Other operating income -20% 493.985 620.390
Finance cost -38% 11.100 17.845
9% 1,610.912 1,472.369
Workers profit participation fund 10% 80.545 73.525
Workers welfare fund -3% 30.607 31.655
Donation -100% - 1.892
Profit Before Taxation 10% 1,499.760 1,365.297
Taxation -9% 521.738 570.876
Profit/(Loss) after taxation 23% 978.022 794.421
Earning per share - basic and diluted (Rs.) 23% 11.88 9.65
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Source: KSE Notice
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