One of Pakistan’s leading automakers, Honda Pakistan, reported a 90% decline in its full-year net profit as a result of rising expenses and the nation’s struggling economy.
The business declared a net profit of Rs. 260.141 million for the fiscal year that ended March 31, down from Rs. 2.509 billion the year prior, in a stock filing. For the specified period, the corporation didn’t make any payments. Earnings per share decreased to Rs1.82 from Rs17.58 from the previous year.
According to Honda Pakistan, its annual sales decreased from Rs. 108.047 billion to Rs. 95.087 billion. In comparison to Rs. 102.515 billion during the same period previous year, its cost of sales stayed at Rs. 87.926 billion.
Honda reported that its other income increased to Rs. 2.321 billion during the period from Rs. 2.004 billion the prior year. The margins were impacted by the increase in other costs, which went from Rs. 984.045 million to Rs. 4.929 billion.
Impact of Economy on Auto Industry
Brokerage Arif Habib Ltd said that reduced volumetric sales and higher borrowing costs, which increased by 6.5x on an annual basis, were to blame for the sharp decrease in profit. The country’s economic difficulties have been particularly hard on the import-dependent auto industry. One of the automakers who had also announced factory closures was Honda.
Due to lower customer affordability brought on by higher interest rates and vehicle costs, non-production days, rupee depreciation, and rising gasoline prices, the auto sector is experiencing severe setbacks. The industry has also seen layoffs as a result of the facility closures.
According to Pakistan Automotive Manufacturers Association’s most recent figures, passenger car sales in April decreased by 85% to 2,844 units from 18,626 units in the same month last year.
A total of 88,620 units have been sold in the first ten months of the fiscal year 2022–23, which is a 54% decrease from the 191.238 units sold in the same period last fiscal year.