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Honda Atlas Q3 profit shrinks to Rs257 million due to rising costs

Honda Atlas Q3 profit shrinks to Rs257 million due to rising costs

Web Desk
Nov 23, 2024

ISLAMABAD: Honda Atlas Cars (Pakistan) Limited (HCAR), the company responsible for manufacturing and selling Honda vehicles in Pakistan, has reported a significant drop in its profitability for the third quarter of calendar year 2024 (Q3 CY24).

The company’s profit-after-tax fell to Rs257.74 million, translating to earnings per share (EPS) of Rs1.8.

This marks stark decline compared to Rs675.34 million profit (EPS: Rs4.73) recorded same period last year (SPLY).

Despite the dip in profits, the company’s revenues saw 18.92 per cent increase, reaching Rs16.6 billion. However, the reason for paradox lies in rising costs.

The cost of sales outpaced growth in revenue leading to a 20 per cent decline in gross profit, which stood at Rs1.22 billion for the quarter. Consequently, gross margins also took a hit, shrinking to 7.4 per cent, down from 10.9 per cent in SPLY.

The situation was further compounded by sharp decline in company’s other income which nosedived by 90.5 per cent to Rs84.85 million, a dramatic fall from the Rs896.57 million reported in the same quarter last year.

This drop in other income played a considerable role in weighing down the overall profitability.

On the expense front, Honda faced mixed results as administration expenses saw 14.5 per cent increase year-on-year, reaching Rs437.92 million.

On the other hand, distribution and selling expenses declined 14.6 per cent to Rs181.17 million.

Additionally, other operating expenses saw bigger reduction of 67.1 per cent, falling to Rs66.97 million.

However, finance costs presented another challenge as they surged 60.9 per cent climbing to Rs193.31 million from Rs120.17 million in the SPLY.

This was largely owing to the ongoing rise in interest rates, further adding pressure on the company’s bottom line.

On the brighter side, the company saw significant reduction in tax liabilities. Honda Atlas paid Rs168.71 million in taxes during the quarter, a considerable 79.7 per cent decrease compared to the Rs829.64 million it paid in taxes during the corresponding period of last year.