Indus Motor announces financial results for half year ending Dec 08 - Feb 24, 2009 The Board of Directors of Indus Motor Company Ltd., met on February 24, 2009 to review the company’s financial and operating performance for the half year ended December 31, 2008. Mr Ryoichi Sasaki, President, Toyota Motor AsiaPacific, who has regional responsibility for Engineering, Manufacturing and Marketing, and is also a member of IMC Board, flew in especially for the meeting from Singapore. Pakistan Automobile Market The fallout from global recession coupled with the weakness of the Pakistan economy severely dampened the demand for locally assembled Passenger Cars (PC) and Light Commercial Vehicles (LCV) in the country. Overall volume for six months ended December 2008 declined by 40% to 53,052 units compared to 88,902 units sold in the corresponding period last year. The drop in sales volumes is mainly attributable to limited availability of auto credit and high interest rates. In addition, the auto industry also had to deal with the challenges posed by the unfavorable post 2008 budgetary measures like 35% Cash Margin requirement and 5% Federal Excise Duty that further compounded the situation for both OEMs and the vendor industry. Company Operating Performance The sales of Toyota and Daihatsu brands of both CKD and CBU, for the first half year ended December 2008 declined by 40% to 13,927 units as compared to 23,138 units sold for the same period in the prior year. The Company was however able to improve its market share from 22% to 24% due to strong acceptance of the brand and product range by its valued customers. Production fell 35% to 14,844 units compared to 22,824 units manufactured during half year ended December 2007. The main contributing factor affecting decline in sales volume apart from the volatile macro economic situation that engulfed the entire industry was the run out of the previous Corolla and subsequent launch and gradual ramp up of the new generation model which has been well appreciated by the market. The Company’s sales revenue for the first half year ended December 31, 2008 was down 23% to Rs 14,437 million compared to Rs 18,657 million posted in 2007, while profit after tax recorded a substantial drop of 88% to Rs 163 million versus the record of Rs 1,361 million achieved for the same period in the prior year. Lower sales volumes and reduced profitability on account of stronger Yen against the Pak Rupee, rapid rise in input costs, run out of the old Corolla model and planned annual maintenance shutdown during this period primarily contributed to this decline. The Company will not be issuing an interim dividend for the half year ended December 2008. Near Term Business Outlook Although the business environment for second half of the fiscal year is expected to remain tough given the economic difficulties faced by Pakistan and the impact of the global recession abroad, the Company expects to sell more volume during this period and achieve better profitability. The Company acknowledges the support offered by the Government of Pakistan despite their economic constraints. Since the automobile sector is a major contributor to the national exchequer, the Government should take note and initiate dialogue with the key stakeholders to further boost sales and revisit the Auto Industry Development Plan so that the list of localization desired in the future is reviewed on the basis of economic viability and irritants like 5% FED are removed.