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Friday, March 1, 2024

Despite massive blow to profits- Indus Motors’ earnings up by 23pc

Augmented inflation, continuous decline in PKR against the US dollar, and skyrocketed imported raw material prices (especially steel prices) have caused an abrupt fall in gross margins to 6.68 percent in FY22 in comparison to 9.3 percent in FY21.

Indus Motor Company Limited posted earnings of PKR 15,802 million (EPS: PKR 201.04) in FY22, growing by 23 percent from PKR 12,829 million (EPS: 163.21) in FY21, according to Arif Habib Limited.

However, the earnings during the last quarter were quite low, showing a fall of 88 percent YoY and 90 percent quarter-on-quarter. This blow to profits was denoted to the lower gross margins and higher taxation under super tax imposed by the government.

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Therefore, INDU declared a final cash dividend of PKR 3.25 per share in last quarter of FY22 which stood at PKR 36.5 per share during the final quarter of FY21. It led to the total dividend to PKR 93.75 per share for FY22 which was previously 103.5 per share in the preceding year, FY21.

Despite the back-breaking inflation, net sales of the company increased to PKR 275bn during FY22, up by 54 percent from PKR 179bn in FY21.

Moreover, there was an increase in revenue during fourth quarter of FY22 by 50 percent YoY reaching PKR 72bn as a result of higher prices and greater volumetric demand which was 23.3 percent more than in FY21.

Augmented inflation, continuous decline in PKR against the US dollar, and skyrocketed imported raw material prices (especially steel prices) have caused an abrupt fall in gross margins to 6.68 percent in FY22 in comparison to 9.3 percent in FY21.

Furthermore, other income increased by 209 percent during final quarter of FY22 as compared to SPLY led by higher interest rate earnings on a significantly higher quantum of advances from customers.

Imposition of super tax crushed majority of the large-scale businesses which led to closures causing massive unemployment and decline in exports. INDU booked effective taxation at 88 percent in fourth quarter of FY22 which demonstrates a huge impact of super tax on the company.