Honda Atlas Profits Drop by 64 percent in First Half as Company Issues Plans for Future - Android

Honda Atlas has announced its financial results for the 1st half-year that ended on September 30th 2019. The company posted a… Read More

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Honda Atlas has announced its financial results for the 1^st half-year that ended on September 30^th 2019.

The company posted a profit of Rs. 751 million; down by 64% as compared to Rs. 2.08 billion in the previous year. The major reason behind the drop in profits was the decrease in sales as the volumes which sunk by 50.65% due to a rise in prices and rupee’s devaluation against the US dollar.

The sales of the company clocked in at Rs. 29.52 billion, a decrease of 40.60% as compared with Rs. 49.67 billion in the same period last year.

However, the cost of sales of the company was stated at Rs. 26.96 billion, down 41.25% against Rs. 45.87  billion due to low production, which took the gross profits to Rs. 2.56 billion against Rs. 3.80. Billion.

HACPL had reduced working days to 11 in September as against 13 in August and 20 in July.

The other major reasons were higher car prices owing to the devaluation impact, the 10% FED imposition on 1,700cc and above cars (i.e. Civic) and the imposition of Advance Customs Duty (ACD) i.e. 5% on all the imports.

Decline in volumes was led by 52.40% lower Civic and City sales and BRV’s 25.33% drop in sales.

Moreover, the overall increase in car financing costs due to higher interest rates has led to a slowdown in demand for the company. Reduced car bookings decreased the other income by 75.27% to Rs. 200.14 million as compared to Rs. 809.42 million.

The finance cost bulked up to Rs. 254.43 million from Rs. 4.40 million due to an increase in interest rates of the country, as the company made short term borrowings during the period. Honda used to have a good working capital due to advance payments, however, that’s not the case anymore because of the low demand in the market.

Earnings per share of the company decreased from Rs. 14.57 to Rs. 5.26.

Quarter Results

In the second quarter, the company posted a profit of Rs. 509.69 million as compared to Rs. 1.03 billion which was almost down by 50%. However, comparing it with the preceding quarter’s profits of Rs. 241.7 million, profits grew by 111% which shows some improvement in the profitability from the previous quarter. The company booked an exchange gain during the 2nd quarter as the rupee appreciated against the US dollar. Operating expenses recorded a reversal of Rs. 65 million due to foreign exchange gains.

Honda’s share at the bourse closed at Rs. 158.51, up by Rs. 7.54 or +4.99% with a turnover of 391,400 shares on Thursday due to the increase in profits from the preceding quarter.

The company plans to close it assembly plant for 23 days in November 2019 to compensate for the decline in sales.

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