Deep in loss in FY23, automakers don't hope for quick recovery

Automakers have been sailing through an economy where the wind is blowing against them, with no sign of weakening.

Representatives from all the four listed companies said restriction on imports, dollar shortage and inflation had shrunk the scope of business of motorised vehicles to an extent in FY23 that they had struggled to operate let alone make a profit.

The scant possibility of a drastic change in the scenario anytime soon gives them little hope for a recovery in the near future.

"Most of the automakers of the country are in trouble. Taka devaluation against the dollar made our imports costly. On the other hand, dollars are unavailable for opening Letters of Credit," said Mostafa Zahid Ahmed, chief financial officer of Aftab Automobiles Limited.

With the dollar exchange rate persistently falling, he said, "I don't foresee any improvement in this situation in the near future."

The automakers' business has also been suffering because of a steep decline in the demand, as inflation squeezed people's purchasing power.

Mr Abdul Haque, former president of the Bangladesh Reconditioned Vehicles Importers and Dealers Association, said the demand for vehicles had fallen 40 per cent year-on-year in FY23 as the prices had jumped as much in the year, compared to the previous fiscal year.

Atlas Bangladesh

The state-owned automaker Atlas Bangladesh has been in the red since FY22. In FY23, its negative earnings ballooned to Tk 97 million.

The government has 51 per cent stake in the company and it had been a major customer of motorised vehicles until recently.

Revenue plunged as governmental, semi-governmental, autonomous and other organisations stopped purchasing vehicles from the company.

Atlas has continued to endure losses in the first quarter of FY24. It has reported negative earnings equivalent to Tk 20.21 million for the quarter through September.

Runner Automobiles

Runner Automobiles endured losses in FY23 for the first time since its 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.

Runner Automobiles manufactures and distributes motorcycles. It functions as the flagship company of Runner Group and the appointee of BAJAJ Autos Ltd.

Costlier motor parts and rising fuel costs have brought down sales revenue, the company said in its earnings note.

Battered by the economic challenges, Runner Automobiles suffered losses in the four quarters though June, 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, said Runner Automobiles in its disclosure.

IFAD Autos Limited

IFAD Autos, which imports, markets, and builds bodies of Ashok Leyland's vehicles, went in the red in FY23 after gaining a profit of Tk 414 million the year before.

Its products include bus, open truck, covered van, light commercial vehicle, special application vehicle, and tractor.

According to the company, its business was hard hit by the exchange loss in foreign currency transactions and commodity inflation during the year.

Aftab Automobiles

The company that manufactures and assembles vehicles of Hino brand is yet to disclose its annual earnings.

"Our first nine months was ok. But the fourth quarter was tough," said CFO Mostafa Zahid Ahmed.

The company made a profit of Tk 4.72 million in the nine months through March, a turnaround from FY22 that recorded a loss of Tk 69 million.

It could secure an income in July-March of FY23, as buyers, who had shelved purchase plans in Covid, executed those during the period, said Mr Ahmed.

[email protected]