LAHORE - Honda Atlas Cars (Pakistan) Limited (HCAR) has announced its 9MFY12, posting Loss After Tax (LAT) of Rs143m translating into a Loss Per Share (LPS) of Rs1 as against the LAT of Rs276m and LPS of Rs1.93 in the corresponding period last year due to decline in production and volumetric sales of the company.

During the 9MFY12 total production of the company declined by 16 percent YoY to 9,900 units in comparison of 11,728 units produced by the company in the same period last year, thus, the company has witnessed 9 percent YoY declined in its volumetric sales to 10,233 units in comparison of 11,185 units in 9MFY11. The biggest decline was experience by the sales of HONDA CiVIC whose sales declined by a substantial 19 percent YoY to 3,840 units in 9MFY 12 while 5,036 units of this segment were sold by the company in 9MFY11 whereas sales of the HONDA CITY showed a modest decline of 1 percent YoY.

In our view, on of the reason behind the decline in sales was suspended operation on the back of unavailability of the parts owing to floods in Thailand from where the company imports CKD kits.  Consequently, monetary sales of the company witnessed a decline of 3 percent YoY to PKR14.43bn in 9MFY12 as against the sales of 14.83bn in the corresponding period last year. Even though the monetary sales has posted a decline of 3 percent YoY which in comparison of the decline in volumetric sales still seems much improved because of the higher prices of both Civic and City.

In addition to this, due to dependency on the imported parts, cost of sales was seen 98 percent monetary sales primarily because of rapid decline in the Pak Rupees against other currencies. As a result of this, HCAR has showed a sharp rise in gross profit of PKR287m in 9MFY12 as against the gross profit of PKR127m.

Despite the growth of 165 percent in other income and 18 percent lower financial charges, a substantial rise in the other operating cost of the company which has witnessed an increase of 104 percent YoY to PKR195m, led the company to post a loss before tax of PKR42m as against the loss before tax of PKR249m in corresponding period last year.