Karachi, May 27, 2022: The HCAR released its financial results yesterday which concluded Auto Sector universe results for 3QFY22. Combined profit after tax declined by 15% QoQ to Rs4.9 billion.
The decline was despite higher vehicle prices, stable volumes and higher other income as hefty finance costs of PSMC took the company’s bottom-line in the red zone, dragging sector’s bottom- line.
HCAR also witnessed a sharp decline in earnings by 56% QoQ over higher operating expenses and effective tax rate. INDU, on the other hand, posted a higher PAT (up by 8% QoQ) supported by a substantial rise in other income.
Robust sales volume keeps net sales elevated
INDU, PSMC and HCAR witnesses a similar growth of 3% QoQ during 3QFY22. PSMC and HCAR witnessed positive movement in sales by 7%/1% respectively owing to recent model launches. INDU posted a decline of 5% QoQ showing some signs of weakness in demand.
Nov-2021 price hikes prevent further erosion of margins During 3QFY22, the auto makers were able to prevent further deterioration in the margins as the full impact of price hikes in Nov-2021 took effect. Margins during the 3QFY22 clocked in at 5.4%, holding the margins levels witnessed during 2QFY22. To recall, with the continuous devaluation of PKR and escalating freight rates, gross margins of the auto sector were significantly dented during 2QFY22 (lowest since Sept-2019, ignoring the COVID-19 lockdown quarter) clocking in at 5.3%.