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Sunday May 05, 2024

Pak Suzuki extends bikeplant shutdown till April 15

By Rehan Ayub
April 04, 2023

KARACHI: Pak Suzuki Motor Co. Ltd. on Monday extended production halt at its motorcycle plant till mid of April, citing an inventory shortage caused by import curbs in the country.

The company had already been observing non-production days for bikes since March 20, which it continued for another two weeks, weighing woes of the industry. “The management of the company has decided to extend shutdown period of its motorcycle plant till April 15, 2023,” Pak Suzuki shared the development at the Pakistan Stock Exchange.

The automobile plant would also observe shutdown on April 7, 2023 and April 14, 2023 due to shortage of inventory level, it added. Pakistan is facing its worst economic crisis. At one hand, the country is standing with only $4.24 billion (as of March 24, 2023) reserves in its central bank, while it also struggles to win an IMF deal amid lack of foreign inflows from other countries.

With alarmingly low foreign reserves and a shortage of US dollar, banks are reportedly denying opening of letters of credit (LCs) for items which are not “essential”. The country’s economic challenges have hit the auto industry, dependent on imports, as many companies have been taking continuous production breaks, blaming inventory shortages.

Honda Atlas has also been observing non-production days for many months and the company’s plant is still shut till April 14, 2023. The company cited that current economic situation of the country and commercial banks’ inability to facilitate the imports of the auto sector had forced it to cut production days.

Pak Suzuki reported a net loss of Rs6.336 billion in 2022, down from profits of Rs2.679 billion the previous year. The company skipped any payout for the said period. Loss per share came in at Rs77/share in 2022, compared with earnings per share of Rs32.56/share last year.

The revenue for Pak Suzuki for 2022 rose to Rs202.466 billion, compared with Rs160.082 billion a year earlier. However, the cost of sales also increased to Rs190.782 billion, from Rs151.911 billion in 2021. The company said its finance cost for the period had risen to Rs11.614 billion, compared with Rs737.041 million the previous year, which converted profits into losses.

“The company has outstanding foreign liabilities of equivalent to $184 million at the year-end of 2022, which increased to $218 million and the company incurred an exchange loss of Rs3.55 billion on foreign currency transactions and balances,” the company secretary of Pak Suzuki in an announcement said. The PKR to USD parity further deteriorated and resulted in the huge unrealised loss in 2022, which may impact the equity of the company in 2023, according to the company secretary.

In February, Pak Suzuki recorded a decline of 67 percent month-on-month and 92 percent year-on-year in its car sales, mainly on the aforementioned reasons.