Karachi (May 7, 2023): Indus Motor Company Limited (IMC), the joint venture between House of Habib of Pakistan, Toyota Motor Corporation and Toyota Tsusho Corporation of Japan1, announced its financial results for the third quarter ended March 31, 2023, whereby the company posted a profit after tax (PAT) of PKR 3,216 million (EPS: PKR 40.92), up by 142% QoQ.
The increase in profit on a sequential basis can be attributed to an improvement in gross margins (+730bps QoQ), which resulted in an operating profit after two consecutive quarterly operating losses during FY232. The company also declared an interim cash dividend of PKR 24.4/share.
The volumetric sales of Indus Motors went down by 55% YoY, due to lower production on account of unavailability of parts amid import restrictions2. The gross margin for 9MFY23 was recorded at 0.15%, down by 875 bps YoY (9MFY22: 8.6%), resulting in an operating loss2. This decline in gross margins came on the back of PKR depreciation. Nevertheless, on a sequential basis, INDU was able to recover its gross margins, recording 6.3% during 3QFY23, as compared to -1% in 2QFY23. This was made possible by passing on the impact of currency depreciation to end customers through higher car prices2.
During 9MFY23, the company’s decline in profitability was overcome by higher other income, which was recorded at PKR 11.6 billion (+51% YoY)2. The upsurge in other income was due to higher returns on short-term investments as interest rates remained elevated2.
The SBP import restrictions and the volatile exchange rate remained a challenge for the company. As a result, the company had to observe frequent plant shutdowns2. The management has reduced vehicle bookings in the past 8-9 months. This has led to a reduction in consumer advances leading to decline in short-term investment2.
The management stated that work on the Hybrid facility is in progress and is expected to launch the HEV vehicle by the end of next year2. This will be a milestone for the company and the local auto industry, as it will introduce a new segment of eco-friendly and fuel-efficient vehicles.
The company also expressed its concern over the payments to customers due to delayed deliveries and urged the government to suspend them until the situation normalizes2.