Pak Suzuki bleeds Rs9.68bn as losses in 6MCY23 as finance costs soar

Pak Suzuki Motor Company (PSMC) sustained losses to the tune of Rs9.68 billion in the first six months of FY2022-23, owing to drop in sales and high finance costs.

The company registered a loss per share of Rs117.58, as compared to LPS of Rs0.21 witnessed in the same period last year (SPLY).

PSMC posted net sales revenue of Rs43.18 billion, a 62% decrease compared to Rs112.63 billion last year. Gross profit stood at Rs4.14 billion in 6MCY23, only slightly lower than Rs4.21 billion in SPLY.

The drop in sales comes as the company remained non-operational through much of the said period, as it faced inventory shortages.

PSMC saw a massive increase in the cost of finance, which rose from Rs1.84 billion in 6MCY22 to Rs10.14 billion in 6MCY23, an increase of over 451%.

The higher finance cost is attributed to rise in interest rate during the said period.

Consequently, the company sustained Rs8.05 billion as losses from operations in 6MCY23, as compared to a profit of Rs781.76 million in SPLY.

Auto woes

Despite securing a last-minute deal with the International Monetary Fund (IMF), industries and consumers in Pakistan are still facing the economic woes they faced head-on earlier.

The country’s auto sector is especially facing economic headwinds, including the sector inability to secure Letters of Credit (LCs) needed for imports.

In addition to the LC issue, the sector is also faced with depressed demand due to higher prices and record-high interest rates. A falling rupee is not helping either.

Car sales dropped by whopping 57% year-on-year (YoY) in the first month of the fiscal year 2023-24, as per data given by Pakistan Automotive Manufacturers Association (PAMA).

The registered car manufacturers with PAMA cumulatively sold only 5,092 units in the month of July.

The month-on-month (MoM) decrease stood at 16%, as per the data.