PSMC profit after tax increases

RECORDER REPORT

KARACHI: The profit after tax (PAT) of Pak Suzuki Motor Company (PSMC) has increased to Rs 1,369.337 million in the half year period ended June 30, 2012 as compared to Rs 278.889 million earned in the corresponding period in 2011.

The board of directors of the company in its meeting held on Friday declared that the company’s earning per share has increased to Rs 16.64 in the period under review against Rs 3.39 in the same period last year.

According to the financial results sent to Karachi Stock Exchange, the company’s turnover increased to Rs 36.471 billion in the first half of 2012 against Rs 23.250 billion in the same period in 2011 while the cost of sales increased to Rs 34.219 billion against Rs 22.427 billion.

The company’s profit before taxation increased to Rs 1,863.466 million in the first half of 2012 against Rs 545.996 million in the same period in 2011.

On quarterly basis, the company’s profit after taxation increased to Rs 780.515 million translating earning per share of Rs 9.48 in the quarter ended June 30, 2012 as compared to after tax profit of Rs 187.464 million with per share earning of Rs 2.28 in the same quarter in 2011.

“The company’s earning growth stems from 57 per cent growth in Topline primarily on account of improved pricing scenario in addition to strong volumetric growth upto 48 per cent on year-on-year basis”, Zeeshan Afzal, an analyst at Topline Securities said.

Moreover, increase in prices has some what more than compensated increase in cost which led to margins improvement by 2.6ppt to 6.17 percent, he added.

Zoya Ahmed an analyst at BMA Capital said that PSMC reported PAT of Rs 369 million, up by phenomenal 392 percent primarily driven by 57 percent increase in net turnover.

This exceptional increase in net sales was a result of completion of the yellow cab scheme driving up volumes by 40 per cent and increase in car prices twice 7 percent to pass on the Rupee depreciation. Moreover, change in taxation scheme on account of turnover tax adjustment also played its part as the company’s effective tax rate reduced to 26.5 per cent in the first half of CY12 from 48 per cent in the same period last year.

PSMC sold 30,797 cars in the second quarter of CY12 as compared to 18,248 in the same period last year mainly due to the Yellow Cab Scheme where Mehran and Bolan were the prime beneficiaries. Subsequently, Mehran witnessed an increase of 90 per cent in volumes on quarter-on-quarter basis to 9548 units followed by Bolan registering a 94 per cent increase in volumes.