The increase in profits can be taken as a strong indicator about market appetite in auto sector in Pakistan.
For example, earnings of Honda Atlas Cars’, a leading auto player in Pakistan, for the year ended March 2006 posted massive upsurge. After tax profit for the company soared by 335% to Rs 705m compared to Rs 162m last year.
The exceptional growth in the bottom line primarily emanated on higher sales volume and increased margins.
Higher selling prices of Honda City cars and appreciation of the Pakistani Rupee against the Japanese Yen during the period also contributed positively. Sales revenue for FY06 surged by 55% to Rs 25,639 million while gross profit for the year stood at Rs 1,168 million, 312% hike as against Rs 283 million in FY2005.
Operating expenses of Honda Atlas increased by 43% to Rs 284 million due to upward adjustment in the entry-level salaries and additional advertising and promotional expenses on launch of New Honda City and Honda Accord.
On the other hand, 92% upsurge in the other operating income of the company boded favourably for the bottom line.
Honda Atlas has also declared 70% bonus shares for the year ended March 2006.
Honda Atlas Cars’ CKD sales stood at 31,401 units, portraying 57% increase over 20,004 units during the same period last year. Honda Civic’s sales stood at 13,417 units while 17,984 units of Honda City were sold during the year.
Sales revenue of the company soared by 55% to Rs 25,639 million in FY06 compared to Rs 16,587 million previously. It includes Rs 1,119 million from trading business. The company has also entered into the CBU business by launching Honda Accord. The new car is targeted to the high-end segment of the market.