Sazgar Engineering Works Limited (SAZEW): Profits Jump Despite Margin Pressure

Sazgar Engineering Works Limited (SAZEW) has shared its earnings for FY25, and the company had quite an eventful year.

The company earned PKR 16.3 billion in profit, which translates into an Earnings Per Share (EPS) of PKR 270.3, which is more than double last year’s figure. Alongside, investors were rewarded with a healthy cash dividend of PKR 52 per share for the year.

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What drove the results?

• Higher sales: SAZEW’s revenue reached PKR 108.7 billion, up 89% from last year. This was supported by solid growth in 4-wheeler and 3-wheeler sales.
• Car sales growth: 4-wheeler sales stood at 2,791 units, while 3-wheeler sales were at 6,258 units in the last quarter.
• Gross margins slipped: Margins fell to 25.1% from 29.1%, mainly because of lower sales of the high-margin Haval H6.

Other key highlights

• Finance cost dropped: Expenses on loans fell sharply by 57% YoY, thanks to debt repayments and lower interest rates.
• Expenses rose: Selling and administrative expenses went up due to higher marketing and distribution costs.
• Other income dipped: Income from interest and cash balances fell 34% YoY, but improved slightly compared to the last quarter.
• Tax rate: The Effective tax rate stood at 38.9%, almost the same as last year.

Outlook

The near future looks stable for SAZEW, with softer interest rates and easier auto financing policies expected to support demand. However, competition in the hybrid SUV segment (from players like Tucson HEV, Sportage L HEV, MG HS PHEV, and BYD Atto 3) may put pressure on market share.

Bottom line

SAZEW has delivered robust earnings growth, even though margins took a hit. With strong sales and lower finance costs, the company has shown resilience. But the real challenge ahead will be holding on to its market share in an increasingly competitive auto market.

Source: Foundation Securities

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →

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