Indus Motor Company Limited (IMC), announced its financial results for the first quarter ended September 30, 2022, witnessing a massive decline in profit after tax by 76% to Rs. 1.30 billion, as against Rs. 5.42 billion achieved in the corresponding quarter last year.
The decline in net profit was mainly due to lower CKD and CBU sales volume and increase in input costs mainly on account of severe PKR devaluation against US Dollar, which is partially off-set by an increase in other income due to higher fund size and higher interest rates.
During the quarter, the Company’s combined sales of Completely Knocked Down (CKD) and Completely Built Unit (CBU) vehicles decreased by 52% to 8,994 units as against 18,855 units sold in the same quarter last year. The Company produced 9,218 vehicles, 45% lower, as compared to 16,896 units produced in the same quarter last year. The decline in production was mainly owing to limited imports of CKD kits as allowed by State Bank of Pakistan (SBP), forcing the company to observe regular plant shutdown during the quarter.
The net sales turnover decreased by 43% to Rs. 37.25 billion, as compared to 65.55 billion for the same period last year. The Company’s overall market share for the quarter stood at 19%.
Expressing his views, IMC Chief Executive, Ali Asghar Jamali, commented, “The first quarter of 2022-23 has been off to a turbulent start, not just for us but for the industry too. Since July this year, we have been operating at 50% plant capacity, given the business environment and external challenges that the auto sector is currently facing, and the continuing restrictions on CKD imports by SBP. We request the Government to reconsider its restrictions placed on CKD imports. A mere 3% of the country’s total import bill goes towards the auto sector, however the restrictions posed are not only having a significant adverse impact on the automobile players, but also the country’s local vendor industry and the associated 3 million direct and indirect labour employed with it.
He further said, “IMC continues to deliver vehicles at old committed price to customers, despite the volatility of Pak Rupee against US Dollar and in international commodity prices. However, going forward, continuing restrictions on CKD imports by the SBP and decline in demand due to lower purchasing power of customers and impact of the devastating floods, may continue to impact the volumes and sales of auto sector.”
Based on the results, the Board of Directors announced an interim cash dividend of Rs. 8.20 per share for the quarter.