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Honda Cars records half year profit of 273 million

Honda Cars records half year profit of 273 million

LAHORE: Honda Cars has filed its second quarter earnings from July to September to the Pakistan Stock Exchange. The quarter sees Honda’s total earnings reduce by 159% quarter-on-quarter (QoQ) from a profit of Rs 658 million to a loss of Rs 385 million. The loss translates into a half year profit of 273 million. This is a 85% year-on-year (YoY) reduction from the Rs 1.867 billion it recorded over the same period last year. 

Honda’s sales revenue fell by 35% QoQ from Rs 30 billion to Rs 19.5 billion. The contraction revenue can be attributed to the QoQ dip Honda saw in its sales from April till June to July till September. Monthly average sales dipped from 1,574 units to 938 units for a total contraction of 40% whereby QoQ sales dipped from 9,442 units to 5,626 units. Cost of sales as a percentage of sales revenue also rose QoQ from 94% to 97% leading to the gross profit margin to decline from 6% to 3%. However, in YoY terms, Honda’s half year revenue increased 4% from Rs 47.7 billion to Rs 49.7 billion.

Honda’s other income also rose by 50% QoQ from 526.6 million to 787.7 million. This is also a 53% YoY increase from the Rs 516 million it earnt over the same period last year. Honda’s effective tax rate also rose from 40% to 342.3%, likely on account of the super tax adjustment for FY22. Finally, Honda’s earnings for the quarter ended with a loss of Rs 385 million. This is a 159% reduction from the Rs 658 million it recorded in the previous quarter. This is also a Rs 1.3 billion decrease from the Rs 939 million it recorded over the same period last year. 

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Looking at the quarter ahead, it is likely that Honda will fare similarly, if not worse. This is because of the persistent issue that Honda has faced in regards to importing completely-knocked-down (CKD) kits due to the State Bank of Pakistan’s (SBP) administrative oversight of these imports. This will be alongside the aforementioned numerous problems already plaguing the industry. Honda’s gross profit margin in the coming quarter will be noteworthy to see on account of their newly launched HR-V. The vehicle has been available for almost a month, and is likely to have increased costs of sales and production for Honda as localisation levels are likely to be low for it, given how new it is.




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