Pakistan Suzuki Motor Company is off to a flying start in the first quarter of 2015. The same exogenous factors that supported gross margins in CY14, have stayed in the company’s favour to-date. International prices of steel are still soft and the Japanese Yen has devalued by about 18 percent against Pakistani Rupee over the past year. But unlike previously, car sales also witnessed a raging boost in 1QCY15.
The company has announced that it will introduce a new 1000cc variant in CY16 and put an end to the Cultus cult. But other work horses like Bolan, Mehran and Ravi are hot cakes again. Thanks to the taxi scheme, Ravi and Bolan sales doubled in 1QCY15, when compared to the same period of the previous fiscal. And the ding to sales of Swift and Liana has been more than compensated by the Wagon R which is starting to carve out its share in the domestic market.
The first quarter financials made public last Friday reveal 43 percent growth in the top line in the concluded quarter when compared to 1QCY14. The cost of goods sold didn’t keep pace, so gross margin jumped considerably; from five percent in 1QCY14 to 11 percent in 1QCY15.
Distribution and marketing expenses more than doubled to Rs503 million in the outgoing quarter as against 1QCY14. Finance costs were also raised considerably providing a hint of high capital expenditure associated with the launch of new variants. Yet finance costs as a proportion of the top line remains a terse tally. The resultant bottom line for PSMC is pretty as a picture, with earnings per share of Rs11.5; about double of what it was during the same period, a year ago. What a difference a year can make!
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PAKISTAN SUZUKI MOTOR COMPANY
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Rs (mn) 1QCY14 1QCY15 chg
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Sales 13695 19645 43%
Cost of goods sold 12725 17465 37%
Gross profit 970 2179 125%
Gross margin 5% 11%
Distribution & marketing cost 153 503 229%
Administrative expenses 240 270 12%
Other operating income 146 132 -10%
Finance cost 3 22 701%
PAT 443 946 114%
Net margin 2% 5%
EPS (Rs) 5.38 11.5
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Source: KSE notice
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PSMC CAR SALES
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Rs (mn) 1QCY14 1QCY15 chg
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Liana 36 4 -89%
Swift 1291 928 -28%
Cultus 3820 3895 2%
Mehran 7611 9572 26%
Bolan 3705 7245 96%
Ravi 3559 7674 116%
Wagon R 0 1632 -
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Source: PAMA
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