Runner Automobiles tastes loss for the first time

Runner Automobiles PLC, the country's pioneer in motorcycle manufacturing and exporting, incurred a loss for the first time in the last fiscal year due to the economic slowdown and high inflation.

The company has been facing a tough time, with significant drops in sales across all segments: 2-wheelers, 3-wheelers, and commercial vehicles. This has resulted in a heavy consolidated loss of Tk96 crore.

"Although the company suffered losses at the beginning of its operation, their intensity was not so high," Shanat Datta, chief financial officer (CFO) of Runner Automobiles, told The Business Standard.

"Due to the ongoing economic crisis, many people are delaying the purchase of new cars. Consequently, 2-wheeler sales have dropped by about 50%, 3-wheelers by 40%, and commercial vehicles by 35% in FY23 compared to the previous year," he added.

Inflation has significantly impacted two-wheeler sales, as the target customers in this segment are middle- or lower-middle-class individuals struggling to meet their daily needs amidst rising costs, leading to postponed purchase decisions.

He stated that, overall, the automobile sector witnessed a 35% decline in growth.

As it failed to maintain profitability, the publicly listed engineering firm will not pay any dividends to its shareholders. This marks the first time it has failed to do so since its stock market listing in May 2019.

In the previous fiscal year, it had paid a 10% cash dividend to its shareholders.

Runner Automobiles is engaged in the manufacturing of Runner, UM, and Piaggio two-wheelers. Additionally, it is the sole distributor of KTM motorcycles, Bajaj three-wheelers, and Eicher commercial vehicles in the country.

Consolidated figures include those of subsidiary companies, such as Runner Motors, which sells Eicher trucks and is a subsidiary of the country's two-wheeler manufacturing pioneer, Runner Automobiles.

Runner Automobiles made a net profit of Tk46 crore in FY22 as consolidated but incurred losses in every quarter of FY23. As a result, Runner suffered a big loss at the end of the year.

In fiscal 2022-23, Runner Automobiles' consolidated revenue declined by 40% to Tk663 crore from Tk1,112 crore in the previous year.

Currently, Runner's business situation has worsened compared to the crisis it faced during the Covid pandemic. According to its financial report, Runner generated revenue of Tk964 crore and a profit of Tk34 crore in FY20.

However, in the two following fiscal years, revenue exceeded Tk1,000 crore, and the company also reported profits of around Tk50 crore.

Shanat Datta said, "We have been receiving good demand for 3-wheelers from the customers, but we cannot supply as demand because of foreign currency volatility owing to the fact that the opening of the letter of credit for imports was not convenient enough.

In a disclosure on Thursday, the company reported that its consolidated loss per share stood at Tk7.75 in FY23. In the previous fiscal year, its earnings per share (EPS) were Tk2.40, while the consolidated net asset value per share declined to Tk62.66, and the consolidated net operating cash flow per share was Tk38.32.

The disclosure explained that the deviation was due to a decrease in revenue resulting from declining sales units in the 2-wheeler, 3-wheeler, and commercial vehicle segments, ultimately leading to negative earnings.

Its net operating cash flow increased through better mobilisation of the network, which increased cash sales and advance collection of sales. Negative growth in profitability drives the decline of net asset value per share.

The annual general meeting will be held on 21 December through the digital platform, and 19 November has been fixed as the record date to identify its shareholders.