The company disclosed its Q1 2023 revenue stood at Rs21.84 billion in a filing to the Pakistan Stock Exchange (PSX), representing a significant drop of 54% from the Rs47.74 billion recorded in the same period of last year.
According to Asad Ali, an auto analyst at Insight Research, the decline in revenue has primarily been caused by lower volumetric sales, which are down 74% year over year.
The finance cost for PSMC, which includes exchange loss, mark-up for late delivery, demurrage, and detention charges, increased 12 times year over year and 3 times quarter over quarter to reach Rs12.8 billion in Q1 2023.
Gross margins for the company arrived at 9.1% in Q1, slightly lower than the previous quarter’s 9.8%, despite a hike in car prices.
The gross margins, however, improved year over year, which Ali attributed to rising car prices, declining freight costs, and significant cost-cutting measures.
In line with the decline in volumetric sales and higher inflation, distribution and marketing costs rose by 20% year over year but decreased by 18% quarter over quarter to Rs878 million.
To Rs74 million in the first quarter, the company’s other income sharply decreased by 86% year over year and 87% quarter over quarter.
For the first quarter of 2023, it reported a loss per share (LPS) of almost Rs157, compared to LPS of Rs5.6 in Q1 of 2022 and Rs47 in Q4 of 2022.
Compared to a tax credit of Rs188 million in Q1 2022, PSMC’s tax expenses for the first quarter of 2023 were Rs274 million.
The challenges faced by PSMC and the overall auto sector were exacerbated by the Pakistani rupee’s over 20% depreciation against the US dollar and an average inflation rate of over 31% during the same time period.
The government’s recent decision to limit imports and the opening of Letters of Credit has had a negative impact on the auto industry, which depends heavily on imports.
Consumer demand has also decreased as a result of higher finance costs and a sharp increase in car prices.
The Pakistan Automotive Manufacturers Association (Pama) recently released data showing that car sales in March 2023 totaled 9,211 units, an increase of 62% month over month but a significant decline of 66% from the same time in 2022.