Ifad Autos losses continue as demand for commercial vehicles shrink; lowers dividend to 2%

Ifad Autos faced a challenging year in FY24, as shrinking demand for commercial vehicles led to a 17.21% drop in its sales.

Additionally, due to increased import costs caused by foreign currency hikes, the company's loss for the year widened to Tk16.47 crore, according to its latest financial statements published on the Dhaka Stock Exchange website today. 

Its loss per share also rose to Tk0.62 for FY24, up 7.02% from Tk0.58 the previous year. 

In light of this loss, Ifad Autos reduced its dividend to 2% – 1% in cash and 1% in stock – down from the 10% cash dividend it issued for FY23. As an immediate effect, its share price fell by 16.48% to Tk22.80 apiece today.

Market analysts said the company's recent losses and reduced dividend prompted a sell-off in its shares since the beginning of the trading session on the day.

However, since 17 October, Ifad's shares had surged by 24% over six sessions, reaching Tk27.30 each.

The company has scheduled its annual general meeting (AGM) for 28 December via a digital platform, with the record date set for 18 November to identify shareholders eligible for the declared dividend.

Founded in 1988, Ifad Autos is one of the leading automobile distributors in Bangladesh. It imports and sells light, medium, and heavy truck chassis, bus chassis, tractors, and special vehicles like dump trucks, water tankers, prime movers etc. The company became the sole distributor of Ashok Leyland in Bangladesh in 1994.

According to its previous reports, the company once recorded strong growth in the commercial vehicle market, generating substantial profits.

But it witnessed a blow in FY23 as its revenue and profit declined significantly. 

Its sales declined by 4.76% to Tk903.7 crore due to a decrease in demand for commercial vehicles and the company also incurred a loss of Tk15.37 crore, the first time since its 2015 stock market listing. Its annual report then attributed the losses foreign currency fluctuations and inflation in commodity prices.

Previous data showed that in FY23, Ifad Autos sold 3,833 vehicles, including 1,813 trucks, 1,804 buses, 161 light commercial vehicles, and 55 tractors.

Details of commercial vehicle selling and revenue for FY24 are yet to be published by the company. 

For FY24, Ifad Autos' net asset value per share decreased to Tk36.29, and net operating cash flow per share (NOCFPS) remained negative at Tk1.81, which was Tk37.91, and negative at Tk2.76 respectively in the previous fiscal year. 

Ifad explained the deviation in net operating cash flow in its financial statement, citing a decrease in supplier payments for imported CBU/CKD raw materials, foreign currency exchange losses, and reduced cash receipts from customers compared to the previous year.

Of the total shares, sponsor-directors hold 54.87% shares, institutional investors 27.77%, foreign shareholders 0.02%, and the general public 17.34% as of 30 September.