(February13, 2023): Indus Motor Company Limited (IMC), announced its financial results for the second quarter ended December 31, 2022, witnessing a decline in profit after tax by 74.3%to Rs. 2.62 billion, as against Rs.10.18 billion in the previous year.The decline in net profit was mainly due to lower Completely Knocked Down (CKD) and Completely Built Units (CBU) sales volume and increase in input costs mainly on account of severe PKR devaluation against US Dollar and the rising costs of production. The net operational loss was off-set mainly by higher other income owing to higher interest rates.
The net sales turnover decreased by 35.8% to Rs. 86.83 billion, as compared to 135.18 billion for the same period last year. The Company’s overall market share for the quarter stood at 18%.
The combined sales of CKD and CBU vehicles decreased by 52% to 18,672 units compared to 38,632 units sold in the previous year. Vehicle production too decreased by 49% to18,562 units as compared to 36, 120 units produced in the same quarter last year. The decline in production was mainly due to limited imports of CKD kits and vendor supply chain limitations, which led to regular plant shutdowns during the period.
Expressing himself, IMC Chief Executive, Ali Asghar Jamali, commented, “The country continues to reel with the aftershocks of the massive devastation caused by the floods, unrelenting inflation, depleting forex reserves, an increase in the current account and fiscal deficits, along with an unfavourable global environment. The second quarter too has been rough for the auto industry; frequent shutdowns forcing it to operate at less than 50% production capacityas a consequence of continuing import restrictions. With future production volumes expected to hit another low, we are left with little choice but to offer full refund along with interest, to our customers.”
“This whole situation is posing a bleak future for the auto industry and to deal with all these issues, support from the Government is critical and on an urgent basis. We urge the Government to allow the imports required to maintain current levels of production to keep the industry afloat, in order to safeguard employment of over 3 million direct and indirect personnel in the auto sector.Unless import restrictions are eased out, forced plant shutdowns and non-production days will continue to persist.”
The continued weakening of PKR will increase cost of input raw materials, resulting in further price hike of vehicles.Post half year closing, restrictions on the import of CKD kits and raw materials for the auto sector have been further tightened, since commercial banks are not allowing imports for the auto sector.
The Earnings Per Share of the company for the half year ended December 31, 2022, is Rs. 33.45, compared to Rs. 129.45 in the previous year. Despite the challenging quarter faced by the company, the Board of Directors declared a second interim cash dividend of Rs. 10.2 per share, compared to Rs. 30 per share for the previous year.
