India’s Maruti Suzuki posts lower profit, margins contract

28 April 2021 - 07:51 By Reuters
Maruti Suzuki produces the popular S-Presso.
Maruti Suzuki produces the popular S-Presso.
Image: Supplied

Maruti Suzuki India Ltd reported a near 10% drop in quarterly profit on Tuesday and lower margins as the country’s largest carmaker was hurt by a rise in raw material costs and supply chain disruptions due to the Covid-19 pandemic.

Following a steep fall in car sales last year when the pandemic first hit, Maruti’s sales picked up in India over the past two quarters as people opted out of public transport and poured their lockdown savings into big ticket items such as cars.

While the carmaker dealt with rising costs of steel and copper that threatened margins, it passed on some of the costs to customers. Maruti, which sells every second car in India, has already bumped up the prices of its cars twice this year.

The company reported an EBITDA margin of 8.3% for the reported quarter, a profitability metric watched closely by analysts. Analysts had expected 9.1%, according to Refinitiv data.

For the fourth quarter ended March 31, Maruti’s net profit fell to 11.66bn rupees (roughly R2,247,841,184) from 12.92bn rupees (roughly R2,497,371,400) a year earlier, according to a regulatory filing. Analysts had expected a profit of 17.39bn rupees (roughly R3,361,382,839).

Revenue rose 32% to 240.24bn rupees (roughly R46,436,953,034) and the car maker recommended a dividend of 45 rupees (roughly R8,70) per share.

Cost of materials consumed jumped 45.1% to 120.66bn rupees (roughly R23,324,542,688) during the quarter, Maruti said on Tuesday.

The company’s domestic sales during the fourth quarter rose 26.7% to 456,707 vehicles. The year earlier period faced a significant decline in sales volumes due to pandemic-related lockdowns in India.

Maruti shares were trading down 1.2% at 6,561.65 rupees (roughly R1,268).