Karachi, Honda Atlas Cars Limited (HCAR) released its third-quarter results for the fiscal year MY24 today, revealing a decline in earnings primarily due to an unexpected surge in finance costs.

According to AKD Securities Limited, the company posted a profit after tax (PAT) of PkR143 million for 3QMY24, equivalent to an earnings per share (EPS) of PkR1.0. This figure matches the PAT reported in the previous quarter but shows a notable decrease in EPS from PkR4.7. The results fell short of market expectations, with increased financial charges cited as a key factor.

The company's revenue for the quarter stood at PkR12.4 billion, representing an 11% decrease from the previous quarter and a 46% year-on-year decline. This significant reduction in revenue is attributed to a drop in sales volumes. Honda Atlas Cars sold only 2,375 units in the reported quarter, compared to 2,510 units in 2QMY24 and 5,477 units in the same period last year.

Gross margins for HCAR contracted to 8.3%, down from 10.9% in the previous quarter. The primary reason for this decrease was a reduction in ex-factory prices towards the end of October.

Another notable change was in the company's other income, which saw a substantial 68% quarter-over-quarter decline, amounting to PkR288 million. This decrease is largely due to a reduction in short-term investments, which fell to PkR3.8 billion in September 2023 from PkR10.1 billion in June 2023.

The most significant deviation from projections was observed in the financial charges, which surged to PkR443 million, vastly exceeding the expected PkR26 million. This increase may be attributed to a rise in borrowings or higher discounting of long-term trade debts.

Overall, the earnings for the nine months of MY24 accumulated to PkR6.7 per share, compared to PkR7.6 per share in the same period last year, marking an 11% year-on-year decrease.