Honda Atlas Cars: Gunning the engine in 3QFY12 January 30, 2013 BR RESEARCH 0 Comments

Honda Atlas Cars (HCAR) posted its third quarterly results for FY13 on Tuesday, January 29, whereby its top line boasted a humungous boom of 78 percent YoY to tally Rs6.72 billion. The Companys sizeable top line growth has gone against the tide in a sector where other players are not grappling well with the competition from imported cars. Sales revenues have boosted on the heels of a new model of Civic launched during September 2012, which resulted in enormous growth of 49 percent YoY in total sales volume during October-December, 2012. Besides, the resurgence in production after last years flood in Thailand and conversion to EURO- II compliant cars have brought good tidings for the Company. By comparison, Indus Motor Company and Pakistan Suzuki have been bashed by the termination of the Punjab Government Taxi scheme and termination of non EURO-II compliant cars like Cuore and Alto. HCARs cost remained under pressure due to depreciation of the local currency against Japanese Yen and domestic inflationary pressures. However the increased cost burden was passed on to customers, taking vehicle prices up by an average of 19 percent, compared to the same period last year. Consequently, the gross margin rebounded to five percent in 3QFY13, up from 0.42 percent last year, despite 70 percent surge in costs. Distribution and administrative expenses soared by 41 percent during the period owing to the launch of the new model of Civic. Still, a boom of 1.45 times in other income due to factors such as profits on deposits, gain on investments and profits on advances to suppliers; kept operating margin intact which grew to three percent during October December, 2012, up from negative three percent during the same period, last year. All these factors translated into earnings per share of Rs0.57 in 3QFY13, as against loss of Rs0.81 per share during 3QFY12. Monthly comparison reveals that sales remained depressed during December sliding by 39 percent MoM to 864 units as against 1,420 units in November which is indicative of the New Year registration trend as people continue to postpone their purchases of vehicles until January in order to get latest registration numbers. That means sales in January will, in all likelihood, be even stronger than the recently concluded quarter.

Engro Foods goes on its merry way April 19, 2013 BR RESEARCH 0 Comments

Coming in slightly below expectations, Engro Foods opens the year on a relatively subdued note as the top line manages to shed 0.4 percent, even as earnings climb a healthy 34 percent year-on-year. The high base effect on account of the phenomenal closing quarter in CY12 on the whole casts a shadow on the firms performance during 1QCY13 as the figures are marred by the sequential drop in earnings, which have slid 33 percent quarter-on-quarter as a result of a seasonal shift in demand which historically peaks during the winter season and outs at the onset of summer. During the quarter, the firms top line shed some 11 percent as volumetric sales of the firms top selling ambient and chilled dairy remained flat. Meanwhile the drawn out winters in a large part of Punjab meant that sales for the firms juices and ice cream- which begin to pick up by this time- were also slow to gain momentum at the close of April. However margin accretion for the rapidly growing food manufacturing giant remains right on track as improved process efficiencies helped ease some pressure off during the quarter. Additionally, during the period from January to April, the flush season in milk production drives down the cost of this essential raw material for local food manufacturers, which also helped translate into a 6.18 percentage point gain year-on-year in the firms gross margins for the aforementioned period. However, higher costs incurred in lieu of selling expenses whittled away Rs 2.8 billion from the gross profits during the quarter. During the last three months, Engro foods has introduced a new ice cream variant "Thunda Meetha Paan" for which extensive advertisement campaigns were run. Additionally, the unveiling of the newly re-launched Olpers milk also soaked up revenue, driving up distribution expenses by 18 percent quarter-on-quarter. Going forward, the firm is likely to see a hike in costs of input as the second quarter marks the beginning of the lean period for milk collection. However the recent hike on the prices of dairy products is going to largely balance out this effect. Moreover, with the onset of summers is likely to come a strengthening in demand for the firms chilled dairy and juices, which will set the company back on the arc to capture record profits in time for the half year close.