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Last Updated : Jan 25, 2019 03:53 PM IST | Source: Moneycontrol.com

Maruti Suzuki Q3 disappoints, profit falls 17% to Rs 1,489 cr on adverse commodity prices, FX rates

Revenue from operations in Q3 grew by 2 percent to Rs 19,668.3 crore in quarter ended December 2018 despite tepid sales volumes, driven by price realisation.

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Country's largest car maker Maruti Suzuki India disappointed the Street on Friday as profit for the third quarter plunged 17 percent year-on-year to Rs 1,489.3 crore dented by adverse commodity prices and forex rates.

Profit in the year-ago period stood at Rs 1,799 crore. Profitability, which was partly supported by higher other income and lower tax cost, is far lower than analyst estimates. CNBC-TV18 poll estimated profit at Rs 1,773 crore on revenue of Rs 19,600 crore for the quarter.

"Adverse commodity prices & foreign exchange rates, higher marketing & sales expenditure and higher costs in resources and capacities which were earlier planned to enable a higher estimated growth impacted the profitability," Maruti said.

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The impact was partially offset by the company’s regular efforts in cost-reduction, VA-VE exercises, suggestions from employees and supplier partners, it added.

Revenue from operations in Q3 grew 2 percent to Rs 19,668.3 crore in quarter-ended December 2018 despite tepid sales volumes, driven by price realisation.

Realisations per car during the quarter increased by 2.6 percent to Rs 4,58,850 in Q3FY19 compared to Rs 4,47,290 in third quarter of last year.

Maruti volumes dipped 0.6 percent YoY (down around 12 percent QoQ) to 4.29 lakh units, with no significant price hike taken along with higher discounts given during the quarter.

The company also reported dismal performance at operating level. EBITDA (earnings before interest, tax, depreciation and amortisation) tanked 36.4 percent year-on-year to Rs 1,931.3 crore and margin contracted sharply to 9.8 percent against 15.8 percent in same period last year.

The company recorded single digit operating margin for the first time in last five years.

Operational earnings, too, were far below analyst estimates. EBITDA was expected at Rs 2,628 crore and margin at 13.3 percent, according to CNBC-TV18 poll estimates.

"Maruti Suzuki delivered highly disappointing  3QFY19 performance, impacted by cost escalation across the parameters and higher discounting. competitive intensity has restricted company from passing on cost escalation and dragged net profit of the company, despite higher non operating income," Reliance Securities said.

However, the research house expects increase in first time buyers from rural markets and volume improvement on the back of success of new launches (new WagonR).

"Company's strong product pipe line, success of new launches, leadership and strong management capability would benefit company's profitability going forward," it said.

Other income showed nearly 4-fold increase to Rs 917.3 crore during the quarter against Rs 245 crore in same period last year while tax expenses dropped nearly 26 percent to Rs 571 crore YoY.

At 14:44 hours IST, the stock was quoting at Rs 6,593.05, down Rs 444.35, or 6.31 percent amid high volumes on the BSE.

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First Published on Jan 25, 2019 02:47 pm
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