The company sold 64,140 tractors in June quarter, which is 22 percent compared to 82,013 tractors sold in the corresponding period the previous year.
Utility vehicle and tractor maker Mahindra & Mahindra has registered a massive 97 percent year-on-year decline in profit for June quarter 2020 as lockdown hit volumes. Negative operating leverage dented operating income.
Profit including Mahindra Vehicle Manufacturers, a 100 percent subsidiary of the company, stood at Rs 67.8 crore for the quarter ended June 2020, against Rs 2,259.74 crore in the same period last year.
M&M said profit before the exceptional gain of Rs 29 crore declined 96 percent YoY to Rs 39 crore for the quarter.
Revenue from operations fell 56.4 percent YoY to Rs 5,589.43 crore in Q1 FY21 as vehicles sales declined 78 percent to 27,565 units during the quarter.
"The company's key brands which have a strong rural bias saw good demand in the month of June. However, low pipeline inventory coupled with the challenges of ramping up production due to supply chain issues affected the company's sales," M&M said.
The company sold 64,140 tractors in June quarter, which is 22 percent compared to 82,013 tractors sold in the corresponding period the previous year.
"The timely relaxation of the lockdown for the agricultural sector along with positive rural sentiment led to good sales numbers for tractors during the quarter despite the supply chain issues, showing a positive growth rate in May and June 2020," company said in its BSE filing.
Earnings missed analysts' expectations. Profit was estimated at Rs 214 crore on revenue of Rs 5,472 crore for the quarter, as per the average of estimates of analysts polled by CNBC-TV18.
The operating profit margin contracted to 10.2 percent for the quarter, down 380 bps compared to 14 percent reported in the year-ago period.
"The company continues its strong focus on cost management to improve its financial performance in these testing times. Its timely decision to raise funds along with good cash generation in the quarter has further strengthened the company's cash position," M&M said.
Meanwhile, M&M sought shareholders' approval to cut stake in Ssangyong Motor to less than 50 percent.
The company also approved the appointment of Nisaba Godrej and Muthiah Murugappan as additional directors on the board of directors.
The stock was trading at Rs 605.10, down 0.73 percent on the BSE at 13:08 hours IST.