Runner Automobiles’ profit jump in Q2 as sales of three wheelers get a boost

Runner Automobiles has experienced a steep growth in profit year-on-year in October-December (Q2), FY25, mainly riding on a robust contribution of three wheelers to revenue earnings.

It has reported a consolidated profit of Tk 50 million in Q2, FY25, increased from Tk 6.45 million in the same quarter of the previous year.

Company officials said the sale of three wheelers accounted for around 88 per cent of the revenue earnings in Q2, FY25, up from 40 per cent during the same period of the previous fiscal year.

The company's revenue earnings stood at Tk 2.73 billion in the second quarter of FY25, 26 per cent up from the same quarter of the previous year.

Despite the huge demand for three wheelers in the market, the manufacturing of such vehicles remained insignificant as the import of raw materials was hampered seriously amid the dollar crisis and complexities in opening L/Cs (letter of credit).

The company's Chief Financial Officer (CFO) Sanat Datta said there was an improvement in L/C opening during the quarter through December of FY25.

Manufacturers had been required to deposit 100 per cent margin against their import proceeds to open an L/C amid unavailability of dollars in the market.

"Now, an L/C can be opened depositing 20 per cent margin as dollars have become more available," Mr. Datta said.

The profit gained in the second quarter helped Runner reduce loss in H1 of FY25, compared to the first half of the previous year.

Runner reported a loss of Tk 80 million for H1, FY25, down from a loss of Tk 270 million experienced in the same period of the previous year.

It witnessed a growth in its operating cash flow in H1, FY25 due to an increase in sales collection against receivables and reduction in payment to the creditors.

The company's consolidated net operating cash flow per share stood at Tk 14.11 in H1, FY25 while it was Tk 13.62 for the same period a year ago.

Runner Automobiles built a plant of three wheelers in February, 2023, taking technical support from Indian Bajaj. The plant started operating fully in August 2023.

A capital worth Tk 2.65 billion, raised through sustainability bonds, was used as working capital for three wheelers' manufacturing and for building a rooftop solar plant.

The company started experiencing losses in the first quarter of FY23. The trend continued until the first quarter of FY24.

Later, it experienced a consolidated profit of Tk 6.45 million in Q2, FY24 against a loss of Tk 236.16 million reported for the same quarter of the previous fiscal year.

Though the manufacturing of three wheelers remained limited in Q2, FY24, the company returned to profit in the quarter on sales of such vehicles.

The profit of Runner declined significantly in FY22 from the previous year, dragging the company into the red in FY23 because of a hike in raw materials' prices, currency depreciation, and a slowdown in the sales of products.

A significant portion of the company's revenue was wiped out by the finance cost in FY23 because of its loan burden.

In January 2024, the company planned to reduce bank loans by injecting equity funds raised through preference shares.

Runner Automobiles distributed a 10 per cent cash dividend in each of the years in FY19-FY22 but no dividend for FY23.

The company distributed 11 per cent cash dividend for FY24.

Meanwhile, the share price of Runner Automobiles peaked at Tk 33.5 each on November 12, 2024 from Tk 19.20 each on October 20.

Later, the stock experienced ups and downs and finally closed at Tk 29.70 per share on the Dhaka Stock Exchange on Thursday.

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