Cheap credit boosts DIMO June quarter; profits up over 650%

Diesel & Motor Engineering PLC (DIMO), agents for Germany’s Mercedes Benz and India’s Tata vehicles saw its June quarter (1Q16) net profit surging as much as 655 percent year-on-year (yoy) to Rs.228.4 million, largely aided by cheap credit amid historically low interest rates prevailing in the country.

The earnings per share improved to Rs.25.73 from Rs.3.41.

The revenue for the quarter under review rose 43 percent yoy to Rs.8.26 billion. Cost of sales rose 47 percent yoy to Rs.6.81 billion. The gross profit was Rs.1.38, up 28 percent.

The revenue from vehicle sales during the quarter was Rs.6 billion, approximately 75 percent of the group’s revenue.

Sri Lanka’s car registration has been on an upward swing and hit an all time monthly high of 7, 641 units in June.

Local brokerage JB Securities which compiles vehicle registration data on a monthly basis said, Tata Ace, Sri Lanka’s best selling mini truck, accounted for 838 out of the total 1, 567 mini trucks registered in June. About 95 percent of all the trucks were sold on credit.

According to Central Bank data, expenditure on vehicle imports rose 93.9 percent yoy US $ 246.4 million in the first five months of this year.

Meanwhile DIMO’s vehicles after sales segment’s revenue stood at Rs.1 billion, up from Rs.617 million in the same quarter of the previous year.

The marketing and distribution sector’s revenue remained flat at Rs.784 million.

Revenue from construction & material handing equipment sales fell to Rs.248.7 million from Rs.376.8 million. Revenue from electro-mechanical, bio medical and marine engineering segment also fell to Rs.311 million from Rs.419.6 million.