Ayesha Mudassar

Atlas Honda Limited (ATLH), Pakistan’s leading motorcycle manufacturer, reported a substantial 86% growth in its earnings for the six months ended September 30, 2024, posting a net profit of Rs6.6 billion compared to Rs3.5 billion earned during the same period of 2023, according to WealthPK.

The company observes its fiscal year from April to March. ATLH’s net sales increased by 25% year-on-year (YoY) to Rs92.9 billion compared to Rs74.1 billion in 1HFY24. This growth is primarily driven by the company’s sound market position and reliable customer base. Additionally, ATLH recorded a 90% YoY increase in gross profit to Rs8.2 billion in 1HFY25. This improvement was driven by a favourable sales mix, a stable exchange rate, and various cost-reduction initiatives. Other income increased by 23% to Rs5.2 billion, driven by effective treasury operations that benefitted from higher liquidity.

On the expense side, the company observed a rise in administrative costs by 19% YoY and sales & marketing expenses by 23% YoY, clocking in at Rs566.4 million and Rs1.8 billion, respectively, during the period under review. Moreover, other operating expenses declined by 5% YoY to Rs363.1 million in 1HFY25. The company’s finance cost rose by 51% YoY and stood at Rs55.4 million compared to Rs36.6 million in 1HFY24, mainly due to higher interest rates. On the tax front, the company paid a higher tax worth Rs3.7 billion against Rs2.3 billion paid in 1HFY24, depicting a rise of 58% YoY.

Atlas Honda Limited was incorporated as a public limited company on October 16, 1962, under the Companies Act, 1913 (now the Companies Act, 2017). The company is principally engaged in the progressive manufacturing and marketing of motorcycles and spare parts. As of March 31, 2024, Atlas Honda had 124.08 million shares outstanding, which were held by 1,694 shareholders. The largest shareholding (90.2%) was owned by associated companies, undertakings and related parties. Individuals owned 9.24% of the shares, while banks, development finance institutions (DFIs), non-banking financial institutions (NBFIs), insurance companies, modarabas and mutual funds collectively held 0.3% of the shares.

Fiscal year 2024

Atlas Honda recorded an 18% increase in sales, a 26% rise in gross profit and a 94% surge in net profit in the fiscal year ended March 31, 2024, compared to the previous year. The company achieved sales of Rs159.2 billion, a gross profit of Rs12.2 billion, and a net profit of Rs9.7 billion in FY24. Furthermore, ATLH posted gross and net profit margins of 8% and 6%, respectively, during the year. The earnings per share (EPS) for the year were reported at Rs78.24, reflecting a substantial 94% increase compared to Rs40.33 in FY23.

This notable growth underscores the company’s effective utilisation of profits to enhance shareholder value. In addition, the company contributed Rs38 billion to the government and its agencies through various taxes and levies. The company has consistently prioritised enhancing productivity, optimising processes and reducing costs. This strategy encompassed the localisation of Completely Knock Down (CKD) kits, tool modifications, and the establishment of production dashboards.

Future outlook

Pakistan’s economic and financial position continues to improve on account of effective policy management and the resumption of inflows from both multilateral and bilateral partners. The easing of import restrictions is anticipated to facilitate a recovery in the industrial sector. Additionally, maintaining fiscal discipline, implementing structural reforms, leveraging favourable external factors, and promoting domestically driven growth initiatives will surely yield substantial benefits in the coming years.

Credit: INP-WealthPk