LAHORE - Pak Suzuki Motors (PSMC) has declared Rs 206 million profit after tax (EPS: Rs2.51) in first quarter of the fiscal year 2008-09 as compared to Rs 734 million (EPS: Rs8.92) in the corresponding period of the last fiscal, depicting a significant decline of 71.9 per cent, said a report prepared by the First National Equities Limited. Pak Suzuki Motors is the country's largest auto manufacturer, located near Bin Qasim (Karachi), with a capacity to assemble 150k units per annum. Last year, company had completed the plant expansion, which increased its capacity by 25% to 150k units per annum from earlier 120k units per annum. Earlier, Pak Suzuki had an expansion plan to increase its production capacity further to 250k units per annum from its current capacity of 150k units. However, due to currently under utilization of plant because of slowdown in economy as well as depressing demand of new cars, management of the company has decided now to defer its expansion plan till the situation improve. During the period under review, capacity utilization of the plant has decreased to 70.6% from 81.0% in 1Q'07. The company declared Rs206m profit after tax (EPS: Rs2.51) in 1Q'08 as compared to Rs734m (EPS: Rs8.92) in 1Q'07, depicting a significant decline of 71.9%. Despite increase in car prices in the range of Rs10,000 to Rs27,000 by the company in Feb' 08, gross margins plunged to 3.7% in 1Q'08 as against 12.3% in 1Q'07 mainly due to significant increase in foreign exchange rate, which makes imports of the expensive. During the said period, Japanese yen appreciated 18.4% against the Pak Rupee (J' =Rs0.609-average price in 1Q'08 as compared to Rs0.514 in 1Q'07) whereas Euro appreciated 19.1% to average price of Rs95.617 in 1Q'08 from Rs80.269 last year. International steel prices also show a rising trend, which badly impact the gross margins of the auto assemblers. During the period, international steel prices grew 11.0% to US$636 per ton in 1Q'08 from US$574 per ton in the corresponding period last year. During the period under review, sales volumes of the company declined 5.2% to 29,020 units from 30,625 units in 1Q'07. Uncertainty created by political and economic pressures and restricted financing by banks and leasing companies mainly contributed to lower sales volume. Looking at the demand, Company had to curtailed its production to 26,476 units in 1Q'08 as against 28,353 units produced in the parallel quarter last year.