The devastating earthquake and tsunami which devastated Japan last month has started to cast a shadow on the local volume starved stock market, though indirectly. According to industry sources, the natural disaster is likely to erode the quarterly dividends of the automobile companies listed at local stock exchanges through reducing their capacity in terms of production and supply at least in coming months.
Last month’s natural calamity in Japan has badly disrupted the commercial activities of the automobile firms in Pakistan as well as abroad with leading manufacturers like Indus Motor Company Limited (IMCL) anticipating ‘severe’ damage to its manufacturing capacity during the next two months.
The IMCL Secretary Mustafa Hasan Lakhani, on Thursday, informed the regulator, Securities and Exchange Commission of Pakistan and the company’s shareholders in Karachi, Lahore and Islamabad stock exchanges that the calamity had badly disrupted commercial activities of international automobile giants like Toyota.
“The disruption to commercial activity caused by the earthquake and the subsequent tsunami in Japan has severely affected the production and supply of Toyota Products throughout the world,” the secretary said.
Lakhani went on to say that the impact of the downturn on Toyota’s global production and supply was being felt by the company which, he said, had assessed a tentative reduction of about 25 percent in its production during next two months.
“The impact is also felt on IMCL operations; it is a tentative assessment that our production will be clipped by about 25 percent in May and June 2011,” the secretary informed the shareholders in line with the listed companies’ obligation under Listing Regulation No 35 (xxiii) of the Code of Corporate Governance.
The stock market observers believe that the anticipating a natural negative impact of the Japanese disaster, and rightly so, the company had conveyed to the holders of its ordinary shares at local equity market that they should expect a possible decline in their profits in the days ahead.
Analysts also explained that any shrinkage in the profits of listed companies like the Indus Motor was certain to reflect adversely on per share gains of their shareholders at the local stock market. The impact the analysts say may be huge as some 19 companies from the automobile sector are listed only at the Karachi Stock Exchange.
These include Agriautos Industries (AGIL), Atlas Battery Ltd.(ATBA), Atlas Engineering (ATEL), Atlas Honda Ltd (ATLH), Bela Engineering (BEEL), Bela Automotive (BELA), Bal. Wheels Ltd. (BWHL), Dewan Motors (DFML), Exide Pakistan (EXIDE), Ghani Automobile (GAIL), Ghandhara Nissan (GHNL), General Tyre (GTYR), Honda Atlas Cars (HCAR), Pak Suzuki MotorXD (PSMC), Sazgar Engineering (SAZEW), S.N.Kawasaki (SNKA), Taga Pak (TAGA), Transmission Engineering (TREI) and Indus Motor Co (INDU).
