February 19, 2020 (PPI-OT)

Indus Motor Company Limited - Earnings declined massively by 71%y/y to PKR 12.5/share as volumes fell during 2QFY20; DPS: PKR 6.0

Indus Motor Company (INDU) announced its financial results for the 2QFY20 wherein the company reported earnings of PKR 0.9bn (EPS: PKR 12.5), compared to PKR 3.4bn (EPS: PKR 43.3) in the same quarter last year, down 71%y/y. For the six month period profitability is down 67%y/y to PKR 2.3bn (EPS: PKR 29.3).

The company announced a cash dividend of PKR 6.0/share compared to PKR 25.0/share in the same period last year.

Net sales decreased by 47%y/y to PKR 22.1bn primarily on the back of ~60%y/y drop in volumes.

Gross margins weakened by ~400bps y/y to 8.0% attributed to rising costs from PKR depreciation. However, despite stable exchange rate on sequential basis, margins suffered 100bps drop which we think is due to lower sales in high margin segment.

Other income failed to support profitability witnessing 49%y/y decrease attributed to drop in short term investments, stemming from declining advances.

Effective tax rate for the 2QFY20 stood at 30% as against 32% in the corresponding period last year.

© Pakistan Press International, source Asianet-Pakistan