Motorcycle, truck business decline drags Runner into bigger losses 

Highlights:

• In H1 of FY23, loss per share stood at Tk3.13
• Consolidated net asset value per share at Tk62.21
• Shares stuck at floor price of Tk48.4 each

Runner Automobiles Ltd posted losses for the second consecutive quarter that ended in December.

The quarterly loss increased to Tk2.08 per share compared to Tk0.81 in the previous three months through September last year.

Unlike the July-September quarter, when its truck business profits slightly offset the two-wheeler segment losses, both its commercial vehicle and two-wheeler businesses incurred losses in the last quarter.

And the country's pioneering motorcycle manufacturer has ended the first half of the current fiscal year with a Tk3.13 loss per share, compared to a Tk1.49 net profit for the July-December period of 2021.

It happened because of the sharp decline in the two-wheeler, three-wheeler, and commercial vehicle segments, Runner Automobiles said in a disclosure.

The slowdown resulted in revenue declines, it said, adding that the rising dollar and other macroeconomic factors increased material and other related costs.

Import costs of anything have soared by around 25% in the last seven months only because of the depreciation of the taka against the dollar. An even bigger problem industries have been facing in recent months is that opening letters of credit (LCs) for imports became a tough job due to the dollar shortage and the central bank's dollar austerity.

Meanwhile, the motorcycle market fell in the months following its record high sales in January-July 2022, owing in part to the pre-inflation rush, as companies had to raise unit prices while consumers had already tightened their belts due to the rise in fuel prices and inflation.

For the motorcycle industry, many of the months in the second half of 2022 were the worst among their corresponding months since the industry entered the local manufacturing wave in fiscal 2017-18.

It was unfortunate for Runner shareholders that the company depends on each of the three slowed down automobile segments for revenue and profits.

Amid the import slowdown due to dollar austerity, commercial vehicle trips, especially by trucks, declined in the later part of 2022, which hit cargo commercial vehicle sales.

Runner's consolidated net asset value per share was Tk62.61 at the end of December, down from Tk66.5 six months earlier, while Runner Auto shares, which have a face value of Tk10 each, have been stuck at the floor price of Tk48.4 since mid-October.