Honda Atlas Cars posts over 300% profit surge in June quarter
Margins supported by lower input costs and reduced financing charges
Business Desk
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Honda Atlas Cars Pakistan Ltd. (HCAR) reported a substantial 308.4% increase in net profit for the quarter ended June 30, buoyed by stronger sales volume and improved cost margins.
Net earnings rose to PKR 828 million, or PKR 5.8 per share, from PKR 203 million, or PKR 1.4 per share, during the same period last year, the automaker said in a stock filing on Wednesday.
Sales revenue surged 66% year-over-year to PKR 26.5 billion, supported by a spike in unit sales. HCAR sold 5,520 vehicles in the quarter compared with 3,285 units in the year-ago period.
Analysts attributed the gains to increased demand and favorable input costs. "The annual incline is primarily driven by higher volumetric sales and improved margins given lower CRC/HRC prices," said an analyst at AKD Securities. "However, overall earnings were below our expectations due to lower gross margins during the quarter."
Gross margin rose to 8.6% from 6.3% a year earlier, driven by an 11.8% drop in cold and hot rolled coil (CRC/HRC) prices, according to analysts.
Administrative and distribution expenses climbed 46% to PKR 954 million, likely reflecting advertising and promotional outlays for HCAR’s newly launched HR-V variants.
Other income grew 61% to PKR 553 million, backed by a sharp increase in cash reserves. The company’s cash and cash equivalents totaled PKR 5.0 billion as of June, marking a 19.5-fold increase compared to last year.
Financial charges dropped 29% to PKR203 million amid easing financing rates and reduced short-term borrowing, the company noted, citing lower working capital requirements.
The automotive sector continues to navigate a volatile macroeconomic landscape, though recent signs of stability have helped lift consumer sentiment. Analysts expect competitive pricing and input cost efficiencies to remain key earnings drivers in the coming quarters.
Optimus Securities analysts maintain a neutral outlook on HCAR, citing potential volume pressures stemming from the removal of restrictions on used car imports, mandatory FBR eligibility certification, the new NEV levy, and headwinds in farm economics due to reduced cotton cultivation and excessive rainfall. However, the recent launch of the E-HRV is expected to bolster HCAR’s competitive stance in the SUV segment, they added.
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