Pak Suzuki Motor Company (PSMC) has announced a loss of Rs6.3 billion for the financial year ended on December 31, 2022. The company’s foreign liabilities of $184 million at the end of the year have surged to $218 million after the end of the year.
The company has released a statement notifying the Pakistan Stock Exchange that their liabilities, denominated in dollars, have escalated due to the depreciation of the Pakistani rupee against the dollar by around 65% in just one year.
Due to this circumstance, the company’s outstanding foreign liabilities have increased, resulting in a significant exchange loss on foreign currency transactions and balances of Rs3.55 billion.
Tahir Abbas, the head of research at Arif Habib Limited, explained that because businesses buy their raw materials from other nations in dollars, they also have to remit payments in dollars.
Unfortunately, the company now faces growing liabilities as a result of the economy of the nation. After the year’s end, the depreciation of the Pakistani rupee against the dollar resulted in an unrealized loss of about Rs 9 billion, which could have an effect on the company’s equity in 2023.
The company issues a warning that if the State Bank of Pakistan’s restrictions prevent payment of the foreign currency liability, the exchange loss will worsen and the company’s equity may suffer in the fiscal year 2023.
According to a Topline Research report, the company recorded a loss of Rs 3.8 billion in the fourth quarter of 2022 as opposed to a profit of Rs 489 million in the same quarter the year prior.
The company’s loss per share (LPS) in the fourth quarter was Rs46.5 against earnings per share (EPS) of Rs 5.9 in the fourth quarter of 2021, resulting in a full-year loss of Rs6.3 billion, translating into an LPS of Rs77 per share.
The company’s results came below industry expectations due to higher-than-expected finance costs, including exchange losses, markup on late delivery, and demurrage and detention charges.
Finance costs surged 14% year-on-year (YoY) and 4% quarter-on-quarter (QoQ) to Rs5.0 billion in the fourth quarter of 2022 (4Q2022) and rose 16% YoY to Rs 11.6 billion in 2022.
Despite the unfavorable economic conditions, gross margins for 4Q2022 were reported at 9.8%, higher than the 5.2% in the same period last year and higher than the nine months of 2022 (9M2022) margin of 4.1%. Insight Research suggested that the higher gross margins could be due to increased car prices, lower freight charges, and significant cost-cutting measures.
The increase in revenues for the quarter is due to the company’s 91% QoQ growth in unit sales, with revenues for the quarter improving by 101% QoQ. The YoY growth in revenue is primarily due to an increase in car prices. The company’s distribution and marketing expenses rose 15% YoY and 111% QoQ to Rs1,067 million in 4Q2022, which corresponds to the increase in volumetric sales.
The decline in bookings led to a decrease in the company’s other income by 37% YoY and 45% QoQ to Rs583 million in 4Q2022. In 4Q2022, the company recorded tax expenses of Rs3.4 billion, compared to tax expenses of Rs 221 million in the fourth quarter of 2021 and a tax reversal of Rs 976 million in 3Q2022.
