Aftab Automobiles Ltd., Bangladesh’s leading Hino bus assembler, reported staggering losses in the first quarter of the current fiscal year.
The company blamed a combination of chassis model updates and import challenges for the financial turmoil.
Aftab posted a massive Tk 68.6 million loss for the July-September period, a stark contrast to the Tk 1.17 million profit earned in the same quarter last year. The company had even managed a profit for the entire previous fiscal year.
Revenue nosedived as well, plummeting from Tk 340 million in Q1 2023 to a mere Tk 104 million this year. Aftab attributed this downturn to two main factors.
Firstly, the company introduced or modified chassis models for their buses. While these changes potentially offer improvements, adapting to them often requires a temporary sales slump as customers adjust.
Secondly, the ongoing currency crisis complicated international trade. Fluctuations in dollar exchange rates hampered opening letters of credit (LCs) for imports, adding another layer of difficulty.
Aftab acknowledged the need for clear communication about the new models’ benefits and proactive engagement with customers to ease the transition. However, the challenges are evident, reflected in a 9.33% stock price drop that brought Aftab shares down to Tk 27.20 on the Dhaka Stock Exchange.
The company’s per-share loss also paints a grim picture. Aftab lost Tk 0.65 per share in Q1 2024, compared to a meager Tk 0.01 profit per share in the same period last year.
Aftab’s struggles highlight the impact of market shifts and economic woes on even established businesses. The company’s path to recovery hinges on navigating customer transition, managing currency fluctuations, and effectively communicating the value of their updated offerings.