Ssangyong Motor company, the 100% subsidiary of Mahindra and Mahindra (M&M), reported its first ever annual net profit of 58.1 billion Korean Won in 2016 (Ssangyong follows the calendar year as financial year) in a decade compared to a loss of 61.9 billion Korean Won in 2015. The profitability was spurred by higher domestic and export volumes and healthy response to compact SUV Tivoli. This is the first time The South Korean company has registered net profit in a calender year since 2007.
The revenue during the year increased 7% to 3628.5 billion Korean Won as result of the 8% increase in volumes to 1,55,844 units. Domestic volumes increased by 4% while the same from exports increased 16%. This is the highest ever car sales registered by the car maker in 14 years since 2002. Volumes of new compact SUV Tivoli increased 35% to 85,821 units. In December, the volumes touched the 9,000 unit mark.
Export volumes grew 15% in the Asia-Pacific region, increased 27% in East Europe and Africa. Volumes in the western Europe and South America decreased during the year. The operating profit of the company during the year stood at 28 billion Korean Won while the operating margin stood at 0.8%. The company’s strong growth in sales was mostly driven by the Tivoli brand which grew 34.7% year-on-year to 85,821 units, which helped improve the company’s performance.
“Every quarter of the calendar year, the first three quarters, has been positive for Ssangyong. So in some sense, we have turned around and looking now at positive profit and growth from here on. New product launches for SYMC just like for Mahindra, we will see a new product every year,”said Pawan Goenka, managing director. Mahindra and Mahindra (M&M) at a conference call with sector analysts.
In the October to December quarter, the revenue increased by 2.7% y-o-y to 1,000 billion won while the net profit remained flat 19.4 billion Won.
According to the company, the establishment of SY Auto Capital, the captive financing company for SsangYong in South Korea in November last year, supported sales growth by providing high-quality financial services for installments and other one-stop services that combine sales and financing. Since last quarter of 2015 Ssangyong Motor company registered profits for last five quarters.
“Last year, the company was able to recover its market share thanks to the Tivoli and escape from the loss-making situation by posting profits for the first time in nine years. This year, we will successfully launch the large-sized premium SUV Y400 and expand our product line-up to further increase our sales and continue the profitable trend,” said Choi Johng-sik, chief executive officer, Ssangyong Motor.
M&M acquired a majority stake in the Ssangyong in 2011 and is in the process of developing petrol engines with the subsidiary for the Indian market.
As of now Ssangyong’s Rexton is the only product of the company available in India. The South Korean car maker has invested close to 900 million dollars after the being acquired by M&M.
