Mahindra & Mahindra Q1 net profit declines 5.98% to Rs 881.78 cr

Written by PTI | Mumbai | Updated: Aug 9 2014, 02:30am hrs
Mahindra and MahindraShares of the Mahindra were trading at Rs 1,232.10 per scrip on the BSE during the afternoon trade, down 1.18 per cent from the previous close. (Photo: AP)
Homegrown auto major * Mahindra & Mahindra today reported a 5.98 per cent decline in its standalone net profit at Rs 881.78 crore for the first quarter ended June 30, 2014.

The auto major had posted a net profit of Rs 937.91 crore during the same period a year ago.

Net sales on a standalone basis during the April-June quarter declined marginally to Rs 10,597.07 crore from Rs 10,607.27 crore, Mahindra & Mahindra said in a filing to the BSE.

During the quarter under review, revenue from automotive segment stood at Rs 5,988.60 crore and that from farm equipment was Rs 3,932.85 crore. It was Rs 5980.62 crore and Rs 3,899.52 crore respectively in the year-ago period.

"The automotive industry in India is currently facing very challenging times. In the June quarter, in spite of the stiff competition, the entity sold 52,180 utility vehicles and continued its leadership with the market share of 40.5 per cent. The entity also exported 6,565 vehicles in the quarter under review," the company said.

On the farm equipment segment sales, the company said crop damage due to unseasonal rains in some parts of India in March coupled with deficient monsoon in June led to marginal degrowth of 1.2 per cent in the domestic tractor industry in Q1 of 2014-15.

"In this period, the entity sold 72,166 tractors in the domestic market as compared to 71,696 units sold in Q1 of the previous year," it added.

On the outlook, Mahindra & Mahindra said the economy has been displaying some positive trends but if the south west monsoon continues to be weak, it would impact both inflation and consumer demand negatively in the near term.

Shares of the company were trading at Rs 1,232.10 per scrip on the BSE during the afternoon trade, down 1.18 per cent from the previous close.

Highlights

* Q1 profit falls 6 pct to 8.82 bln rupees

* Expects better growth in H2 if monsoon improves

* Plans to launch 5 new vehicles in 15 months

Mahindra cuts growth forecast for tractor market

(Reuters) Mahindra & Mahindra Ltd, the world's biggest tractor maker by volume, has cut its forecast for demand in its home market of India, partly due to delayed monsoon rains.

The automaker said on Friday it now expected the tractor sector in India, where it is the dominant player, to grow by 5 percent in the financial year that started April 1, down from its previous forecast of 8 percent.

"This is a result of delayed monsoon ... and though it has improved right now there is already a loss of sowing so we would see less agricultural output this year," said Pawan Goenka, president of Mahindra's automotive and farm equipment sectors.

India still relies on monsoon rains to irrigate more than half of its farmland and a delay would affect rural demand.

The company made its forecast after posting a smaller-than-expected fall in first-quarter profit.

Mahindra's tractor sales grew by 1 percent in April-June. Goenka said that if the recent pick up in monsoon continues, as forecast by weather experts, the second half of the year could see better growth.

Net profit fell 6 percent to 8.82 billion rupees ($143.67 million) in the quarter ended June from 9.38 billion rupees a year earlier, the company said. Analysts expected profit of 8.36 billion rupees, according to Thomson Reuters data.

Mahindra refrained from big discounts, contributing to better margins and helping the company beat analyst estimates.

Its overall sales rose about 2 percent to 100.96 billion rupees in the quarter compared with a year earlier, even as unit sales of its passenger vehicles fell 12 percent.

The need to push sales comes as the company grapples with growing competition from carmakers such as Ford Motor Co and Nissan Motor Co whose passenger utility vehicles are out-selling those by Mahindra.

After two consecutive years of decline, sales of passenger cars in India are expected to grow between 5 to 10 percent this fiscal year that started on April 1, an industry body said, as the new government works to kickstart the economy and boost consumer confidence.

Mahindra previously said it would launch three passenger vehicles and two commercial vehicles over the next 15 months in an attempt to win back sales and market share.

(1 US dollar = 61.3900 Indian rupee)