Sales of wheels plunge taking Runner Automobiles into the red in FY23

Runner Automobiles endured losses for the first time in FY23 since listing as sales of all segments saw a sharp decline owing to inflationary pressure.

The country's pioneering motorcycle manufacturer reported a consolidated loss of Tk 880 million for FY23, as opposed to a profit of Tk 273 million for the year before.

The consolidated loss per share stands at Tk 7.75 for FY23. The company declared no dividend for the year, also a first time since Runner's 2019 listing in the stock market.

The automobile industry overall has been grappling with shrinking sales revenue due to a rise in the prices of motor parts, fuel costs and raging inflation, said the company in its earnings note.

Product prices and other cost went up because of the stronger dollar and other macroeconomic factors.

"We had a tough year," said Shanat Datta, chief financial officer (CFO) of Runner, adding that sales had dropped since many buyers shelved their purchase plan.

Battered by the economic challenges, Runner Automobiles suffered consecutive losses in all four quarters with nearly half of the annual losses calculated in the final quarter.

That happened because of a steep fall in the sales of two-wheelers, three-wheelers, and commercial vehicles, Runner Automobiles said in its earnings note.

While the sales dropped, the company could not pass on the additional cost burden to consumers who had already been bearing high living costs, said Mr Datta.

Runner is yet to disclose the annual sales revenue data. However, the company's nine months' sales slumped 43 per cent year-on-year to Tk 1.74 billion through March this year.

Sales of trucks nosedived 57 per cent while motorbikes' plunged 30 per cent year-on-year in the nine months through March this year.

Consumers of two-wheelers have tightened their belts due to higher fuel costs and runaway inflation.

On the other hand, a slowdown in imports amid a mounting pressure on the foreign exchange reserves has led to fewer commercial vehicle trips, especially by trucks, which cut sales in the relevant segment.

Import costs of anything have soared around 30 per cent since the Russia-Ukraine war began in February last year only because of the depreciation of the taka against the dollar.

An even greater problem that the automobile industry has been facing is the restriction on opening letters of credit (LCs) on not-so-necessary imports, industry insiders say.

On top of that, an increase in import duty on all types of vehicles in June further hiked the product prices.

However, the company sees a sign of optimism as the demand for three-wheelers has grown since the establishment of a manufacturing plant in February this year.

"A successful entry into the electric two-wheeler segment together with overall portfolio upgradation in line with recent policy changes and revamping of the sales channel are expected to improve our financial results," Mr Datta said.

The new plant helped boost sales as Bajaj-branded three-wheelers attracted customers, offering price benefits, he added.

But the sales growth in this segment alone could not offset losses in the segments of bikes and trucks.

Runner Motors, the subsidiary of Runner Automobiles, launched a few commercial vehicles on Thursday in the Eicher Pro 2000 and 6000 series with the latest technology.

The Automobiles' net asset value per share was Tk 62.62, down from Tk 66.50 for FY23.

The consolidated net operating cash flow per share rose sharply to Tk 38.32, up from Tk 9.72 due to better mobilisation of the network that increased cash sales and advance collection of sales.

The stock has been languishing at the floor price of Tk 48.40 since October last year.

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