PAK SUZUKI MOTOR COMPANY LIMITED

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
July 30 - Aug 5, 2012

Pak Suzuki Motor Company Limited (PSMCL) is a company assembling and distributing Suzuki Japan's cars in Pakistan. Currently it is the largest car assembler in the country. Pak Suzuki is the market leader in Pakistan automobile market by having more than 60 per cent (December, 2011) of market share. Having market share of more than 50 per cent since its inception, Pak Suzuki always strives to introduce new and innovative products and services. Its recently launched Suzuki Swift brand has helped Pak Suzuki increase their market share.

FINANCIAL PERFORMANCE (Rs. "000")

INDICATORS

JANUARY TO MARCH

2012 2011
Turnover 18,764,565 12,569,748
Cost of sales 17,786,076 12,226,844
Gross profit 978,489 342,904
Distribution Costs 60,392 70,872
Profit before tax 788,773 220,358
Net Profit 588,822 91,425
EPS (Rs) 7.15 1.11
BALANCE SHEET UNAUDITED MARCH 2012 AUDITED DECEMBER 2011
Non-current assets 4,681,761 4,716,123
Current assets 19,296,260 18,584,994
Current liabilities 8,531,171 8,008,085

The Company is also manufacturing and marketing of Pickups, Vans and 4x4s, Suzuki motorcycles and related spare parts. Pak Suzuki also deals in Pak Suzuki certified used cars. As of 2006, the Pakistani-assembled Suzuki Mehran is sold equipped with a CNG tank and is one of the few cars in the world which still uses a carburetor based engines.

Presently, Import of used cars continues to be challenge for domestic auto industry. Despite challenges the management is optimistic is striving to maintain its profitability if there is no change in Government policy and yen rupee parity remains stable.

During the period January -March 2012 the industry for cars and light commercial vehicles grew by 7 per cent over same period of last year. During the period 46,623 units were sold against 43,753 units same period of last year. The sales volume of Pak Suzuki improved by 31 per cent from 23,469 units in March 2011 to 30,767 units in March 2012. The Company increased its market share to 66 per cent in overall sales of cars and light commercial vehicles of industry. To meet demand Company increased its production volume from 23,421 units to 30,642 units. The level of production represented 82 per cent capacity utilization. The organized market for motorcycles and three wheelers were dropped by 5 per cent. During the period 203,261 units were sold against 213,121 units same period last year. Pak Suzuki sold 5,837 units during the period against 6,020 units same period of last year. The Company earned net profit Rs 588.822 million compared to Rs 91.425 million in same period of last year. Net sales revenues have increased by 49 per cent from Rs 12.569 billion (March 2011) to Rs 18.764 billion (March 2012) mainly due to higher volume and product mix. Gross profit margin improved from 2.7 per cent to 5.2 per cent and in absolute terms by Rs 635.585 million from Rs 342.904 million to Rs 978.489 million. The improvement was attributable to increase in volume.

Distribution expenses have decreased by 15 per cent from Rs 70.872 million to Rs 60.392 million. The saving accrued from advertising and sales promotion. Administration expenses increased from Rs 162.261 million to Rs 193.119 million but as a percentage of sales marginally decreased from 1.3 per cent to 1 per cent. Other operating income has decreased from Rs 131.518 million to Rs 126.736 million. Expense for income tax increased from Rs.128.933 million (58.5 per cent of profit) to Rs.199.951 million (25.3 per cent of profit). Last year the bank of Punjab had placed an order for supplying 20,000 units of taxi. The order will be completed by June 2012. The progress on this order is satisfactory. During the quarter 3,130 units were supplied. Pak Suzuki has raised the car prices, while the price of Suzuki Mehran has increased by Rs 10,000, followed by an increase of Rs 20,000 in Alto, Rs 25,000 in Cultus, Rs 40,000 in Swift, Rs 15,000 each in Bolan and Ravi and Rs 110,000 in Suzuki Liana respectively.

The car assemblers are raising the prices of automobiles due to losing value of the rupee against the yen. This shows that they have failed to achieve the parts localization targets. Further, the tractor prices have remained unchanged for years due to 90 per cent localization in parts and accessories.

Pak Suzuki being responsible corporate citizen is committed to well being of the society through its contribution in the field of education, health, environment as a whole to improve quality of life of underprivileged people.

FUTURE OUTLOOK

No doubt the company is also striving to achieve maximum indigenization and promote Pakistan's automobile vending industry. Pak Suzuki is still a pioneer in manufacturing automobile and has modern vehicle manufacturing facilities. Suzuki is a renowned name amongst the people of Pakistan as Suzuki products serve majority of Pakistani customers and has become a household name.

PAK SUZUKI MOTOR IN KSE (Rs) (July, 2012)

DATE HIGH RATE CLOSING RATE DATE HIGH RATE CLOSING RATE
2 97 96.52 13 105.9 102.8
3 97.49 95.7 16 106.99 105.32
4 97.5 96.88 17 106.6 102.86
5 99.5 97.83 18 106.98 105.99
6 99.5 98.4 19 111.28 111.28
9 98.99 97.72 20 115.75 107.43
10 99 97.36 23 108 106.18
11 98.5 97.26 24 106 102.76
12 102.12 102.12 25 103.9 102.73