Profits of commercial vehicle sellers slump in Q1

Three listed automobile companies – Ifad Autos, Runner Automobiles, and Aftab Automobiles – posted up to a 40% fall in profits in the quarter.

Tanveer Ahmed, managing director at Ifad Autos Limited, told The Business Standard, "Both our import and transport costs had increased owing to Covid-19, leading to a drop in profit margins." 

Their sales of trucks rose, but those of buses fell in the first quarter like in the previous fiscal year. However, revenue did not fall drastically this time, he also added.

Shanat Datta, chief financial officer at Runner Automobiles, said they had suffered losses from sales of motorcycles and three-wheelers in the quarter.  "With the normalisation of the pandemic situation, we are now on the recovery track," he also said. 

The losses also hit their share prices badly. In the last one month, Ifad's share price dropped by 26%, Runner's share 24% and Aftab's share 22% at the Dhaka Stock Exchange (DSE).

At the end of Wednesday's trading session at the DSE, Ifad's each share closed at Tk50.10, Runner at Tk52.80 and Aftab at Tk30.60.

Aftab Automobiles, which assembles and sells Japanese Hino buses, saw its revenue drop by 40% to Tk19.78 crore and reported a loss of Tk0.87 crore in the first quarter of the current fiscal year.

Officials at Aftab Automobiles said their business has been going through a lean time for a long time. And, bus sales basically dropped as they could not import chassis of any new Hino bus because they cannot open a letter of credit owing to their defaulting on bank loans.

Besides, demand for Hino buses is also dropping as buses of other companies manufactured in India are now becoming popular, they added.

Ifad Autos, a sole distributor of Ashok Leyland vehicles, reported an 8% year-on-year quarterly fall in revenue to Tk173.32 crore and its net profit also decreased by 40% to Tk10.43 crore.

On the other hand, two-wheeler sales of Runner Automobiles fell by 10% to Tk85.48 crore and it incurred a loss of Tk1.09 crore from motorcycle business.

Runner Automobiles is the manufacturer of Runner, UM and Piaggio two wheelers, and also the sole distributor of KTM motorcycles and Bajaj three-wheelers.

The company also sells Eicher commercial vehicles under its subsidiary Runner Motors, which helped the company post growth in consolidated revenue. In the first quarter of the current fiscal year, its truck sales rose by 15% to Tk146.50 crore.