Daily Times

In a key development for the country’s auto sector, Indus Motor Company Limited (INDU) announced that its board has approved an investment of around Rs3 billion ($10.76 million) for enhancing the localization of production.

The company, the maker of Toyota-brand vehicles in the country, shared the development in its notice to the Pakistan Stock Exchange (PSX) on Thursday.

“We are pleased to announce that the Board of Directors, in its meeting held on 21 February 2024, has approved an investment of around Rs3 billion to be made by the company for additional localization of parts and components of various existing vehicles,” read the notice.

Indus Motor shared that the latest investment is part of the company’s overall plan to continuously increase localization of parts and components of vehicles manufactured locally. This will allow the company “to reduce outflow of foreign exchange and promote the local auto industry”.

“The announced investment shall be made towards expenditure in plant and machinery, molds, dies, equipment and related expenses for localization of parts and components to be manufactured locally for various existing vehicles,” Indus Motor said.

The automaker shared the investment is planned to be completed by the third quarter of the calendar year 2025. The automaker in the past has hinted at increasing its product localization.

Profit

Indus Motor Company (IMC) reported on Thursday a profit of Rs4.96 billion for the half-year ended December 31, 2023, an increase of 89% when compared with earnings of Rs2.63 billion in the same period of the previous year. The rise in profit comes despite lower revenue during the period.

As per the latest consolidated financial statements available at the Pakistan Stock Exchange (PSX), the automaker’s earnings per share (EPS) stood at Rs63.07 in 1HFY24 compared with EPS of Rs33.43 in 1HFY23.

The board of directors also declared an interim cash dividend of Rs13.2 per share i.e. 132%. This is in addition to the first interim cash dividend of Rs24.5 per share i.e. 245%, already paid.

During 1HFY24, the auto assembler posted revenue of Rs50.91 billion as compared to Rs86.83 billion in the same period of the previous year, a decline of 41%.

However, despite lower revenue, the company managed to post a gross profit of Rs4.72 billion in 1HFY24, as compared to the loss of Rs2.85 billion registered in same period last year, largely due to the lower cost of sales.

This translated into a profit margin of 9% in 1HFY24, as compared to -3% in SPLY. The company saw its other income reduce 38%, from Rs8.62 billion in 1HFY23 to Rs5.32 billion in 1QFY24. Indus Motor’s finance cost decreased to Rs62.3 million in 1HFY24, compared to Rs68.7 million in 1HFY23.

Consequently, the automaker’s profit before tax clocked in at R7.35 billion in 1HFY24, as compared to Rs3.76 billion in SPLY, a jump of 96%. During 1HFY24, the company paid Rs2.4 billion in taxation, as compared to Rs1.1 billion in 1HFY23.