Karachi, May 26, 2023 (PPI-OT): HCAR: MY23 Result Review

Honda Atlas Cars Limited (HCAR) announced its MY23 result today, where it posted NPAT of PkR260.14mn (EPS: PkR1.82) compared to PAT of PkR2.51bn (EPS: PkR17.6) in SPLY. The significant decrease in earnings in the MY23 is majorly on the back of rising other expenses, possibly driven by high exchange losses during the quarter.

These earnings are well below our expectations, mainly due to the company posting higher than expected other charges clocking in at PkR3.38bn in 4QMY23 up by4.3xQoQ. Total other charges for the year stood at PkR4.9bn up by 4xYoY.

Revenue for the year clocked in at PkR95.08bn in MY23 vs PkR108bn in MY22, while down by 12%YoY. However, HCAR reported net sales of Rs22.3bn, down by 27%YoY, in 4QMY23. The said decrease in revenue is majorly attributed to low volumes with the company selling 25,720 units in MY23 vs 37,603 units SPLY down by 32%YoY with price increases offsetting the volumetric decline.

Gross margins remained strong, clocking in at 7.5% during the outgoing year vs. 5.1% SPLY. To note, gross margins for the quarter stood at 12.5% vs. 7.8% in 3QMY23.

Other income stood at PkR683mn in 4QMY23 increasing by 1.1xQoQ/10%YoY as higher interest rates offset the overall impact of lower cash and ST investments during the period. For the full year, other income clocked in at PkR2.321bn, up by 16%YoY

Distribution and Marketing costs almost remained flat clocking in at PkR902mn/1.3bn, respectively, both down by 3.29%/5.6%QoQ majorly on the back of lower advertising and sales promotion.

Other expenses for the quarter clocked in at PkR3.38bn in 4QMY23, up 4.3x QoQ (MY23: PkR4.9bn), possibly due to higher exchange losses on foreign trade payables due to heavy currency depreciation during the last quarter.