Runner Automobiles fell into the red for the first time since going public in FY23 as sales across all segments fell sharply due to inflationary pressures.
The country’s pioneering motorcycle maker reported a consolidated loss of Tk 880 million in FY23, against a profit of Tk 273 million in the previous year.
The consolidated loss per share for FY23 was Tk7.75. The company has declared no dividend this year, which is also the first time since Runner went public on the stock market in 2019.
The company said in its earnings report that the entire auto industry is suffering from declining sales due to rising auto parts prices, fuel costs and rampant inflation.
A strong dollar and other macroeconomic factors have increased product prices and other costs.
“It’s been a tough year,” said Shanat Dutta, chief financial officer at Runner, adding that sales were down as many buyers put their purchase plans on hold.
Hit by financial challenges, Runner Automobiles suffered consecutive losses in all four quarters, with almost half of its annual losses calculated in the final quarter.
Runner Automobiles said in its financial report that this was due to a significant decline in sales of two-wheelers, three-wheelers and commercial vehicles.
Although sales were down, the company was unable to pass on the additional cost burden to consumers who were already burdened with high living costs, Dutta said.
Runner has not yet disclosed annual sales data. However, the company’s sales for the nine months to March this year fell 43% from the previous year to Tk 1.74 billion.
In the nine months to March this year, truck sales were down 57% compared to the same period last year, while motorcycle sales were down 30%.
Rising fuel costs and runaway inflation are tightening the grip on two-wheeler consumers.
On the other hand, a slowdown in imports due to increased pressure on foreign exchange reserves led to a decline in commercial vehicle movements, particularly by trucks, resulting in a decline in sales in the segment.
Since the Russia-Ukraine war began in February last year, the cost of importing everything has increased by about 30%, solely due to the depreciation of the taka against the dollar.
An even bigger problem facing the auto industry is restrictions on opening letters of credit (LC) for non-essential imports, industry insiders say.
In addition to that, the increase in import duties on all types of cars in June further increased product prices.
However, the company is seeing signs of optimism as demand for its three-wheelers has increased since it set up a manufacturing plant in February this year.
“A successful entry into the electric two-wheeler space, coupled with an overall portfolio upgrade in line with recent policy changes and sales channel renewal, is expected to improve our performance,” Datta said. Ta.
He added that the new plant contributed to the increase in sales as Bajaj brand three-wheelers attracted customers and there was also a price advantage.
However, the increase in sales in this division alone was not enough to offset the losses in the bike and truck division.
Runner Motors, a subsidiary of Runner Automobiles, on Thursday launched several Eicher Pro 2000 and 6000 series commercial vehicles equipped with the latest technology.
The net asset value per share of the auto sector was Tk 62.62, down from Tk 66.50 in FY23.
Consolidated net operating cash flow per share surged from Tk 9.72 to Tk 38.32 due to improved network mobilization and higher cash sales and advance collection of sales.
The stock has been languishing since October last year at a floor price of Tk 48.40.
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