Chip crisis, input costs pull Maruti profit down 65%

With chip shortage and increasing input costs of steel, aluminium, and other metals, Maruti Suzuki’s net profit stood at 475 crores, down by 65 per cent on a YoY basis.

By:October 28, 2021 8:09 AM
maruti suzukiFor representational purposes only

 

Maruti Suzuki India, the country’s largest passenger car manufacturer, on Wednesday missed estimates on all the fronts barring revenue in its July-September earnings, as it was hit hard by the ongoing chip shortage and rising commodity prices. Net profit came in at `475 crore, down 65% on a year-on-year (y-o-y) basis. Bloomberg consensus estimates had pegged the profit at `691 crore.

Net sales at `19,298 crore were up 9.1% y-o-y, while revenue increased 10% at `20,539 crore. Its Ebitda at `855 crore was down 55.8% and margins came in at multi-year low of 4.2%, a decline of 615 basis points on a y-o-y basis.

The company said the quarter was marked by an unprecedented increase in the prices of commodities like steel, aluminium and precious metals within a span of one year.

The automaker further said it made maximum efforts to absorb input cost increases offsetting them through cost reduction and passed on minimum impact to customers by way of car price increase.

The semiconductor shortage faced across the world severely impacted the production of the company. Maruti could not produce approximately 116,000 vehicles owing to the electronics component shortage. The impact was more severe for domestic models. The pending orders for the company at the end of the quarter stood at more than 200,000 units.

Addressing a press conference, Maruti Suzuki chairman RC Bhargava said the company will not post double-digit growth in this fiscal. He added that Maruti had a large impact during the period because one of its vendors could not supply units due to the Covid-19 situation in Malaysia, where its plant is situated.

Due to the production cuts as a result of shortage of semiconductors, Maruti’s total sales was down 3.5% y-o-y at 379,541 units during the quarter with domestic market volumes coming in at 320,133 units and exports were at 59,408 units, the highest ever in any quarter. During the corresponding quarter last year, the company had clocked a total sale of 393,130 units including 370,619 units in the domestic market and 22,511 units in the export market.

The compact car segment continues to contribute the most to the domestic sales volume for Maruti with 43% of the total volumes followed by utility vehicles at 23% and minis at 17%. Vans and LCV contribution to the domestic sales volume was 9% and 3% while 4% came from sales to other OEMs.

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