The car sales numbers which are considered by many as reflection of the economy are showing signs of improvement. The result announced by Indus Motor Company (IMC) for the 1QFY12 is a testament to that. IMC despite increase in prices of raw material and depreciation of rupee against yen has performed well in the 1QFY12. The company like other players in the auto sector seems to be gaining momentum, as the unit sales jumped from 11,792 units in 1QFY11 to 12,820 units in 1QFY12. In revenue terms, the increase in 1QFY12 was roughly 20 percent as compared to the same period of last year; this was primarily due to the increase in the car prices in FY12. The surge in steel prices and depreciation of rupee against yen pushed up the cost of manufacturing hence forcing the company to increase prices. The largest unit sales increase (more than 300 percent) was seen in the Pick-up segment, where as the companys flagship car Corolla experienced a roughly 3 percent increase. The companys economy car Coure also experienced an increase in demand, but still has a very small share in its segment due to its relatively higher price. The company has plans to bring in a new car as Coures replacement and it is anticipating that it would enable the company grab a larger chunk of the market. The increase in car prices and considerably lesser increase in cost of sales (due to higher localisation level) pushed up the gross profit margin for the company. The prospects for the next quarter are good but in long term the outlook for the auto sector is shady as the government is implementing a new entrant policy which can badly affect the IMC and other auto manufacturers.
====================================================================== INDUS MOTOR COMPANY ====================================================================== (Rs mn) 1QFY12 1QFY11 chg ====================================================================== Net sales 17,146 14,343 20% Cost of sales 15,891 13,456 18% Gross profit 1,255 886 42% Gross margin 7.3% 6.2% 18% Distribution & administrative expenses 264 215 23% PAT 937 577 62% EPS (Rs) 11.93 7.35 62% ======================================================================
Source :KSE notice
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