PremiumMaruti Suzuki quarterly profit fell 48% as a global shortage of semiconductors forced the country’s largest carmaker to slash production. Profit, however, beat analysts estimates, sending share prices surging 6.88% to ₹8,600.60 on Tuesday
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Maruti Suzuki India Ltd’s quarterly profit fell 48% as a global shortage of semiconductors forced the country’s largest carmaker to slash production. Profit, however, beat analysts estimates, sending Maruti’s share prices surging 6.88% to ₹8,600.60 on Tuesday.
The local unit of Japan’s Suzuki Motor Corp. said profit fell to ₹1,011 crore for the quarter ended 31 December from ₹1,941.4 crore in the year earlier. Consolidated revenue from operations declined marginally to ₹23,253.3 crore against ₹23,471.3 crore a year ago.
Analysts surveyed by Bloomberg expected the company to report a profit of ₹910 crore on sales of ₹23,110 crore.
Carmakers have struggled to source chips for cars because of the disruptions caused by the pandemic and a global semiconductor shortage, crimping production and profitability.
In addition, a steep rise in the cost of inputs such as steel has hammered the automotive industry. However, with demand for cars outstripping supply, Maruti managed to raise the prices of some models to offset rising manufacturing costs.
The price increases and lower sales-promotion expenses helped the carmaker widen its operating margin by 250 basis points to 6.7% in the December quarter from the preceding three months.
Maruti is also trying to mitigate rising raw material costs by implementing cost reduction programmes. In January, the company raised prices by about 2% across its product range.
The automaker sold 431,000 vehicles in the fiscal third quarter, a 13.5% increase from the preceding three months. Domestic sales grew by 14.2% to 367,000 units, while exports rose by 9.4% to 65,000 units.
The Maruti Suzuki management told investors it had recorded its highest ever export volume in 2021 and expected to sustain this momentum over the medium term.
Maruti’s order book currently stands at 264,000 units, but the company continued to encounter supply issues due to the semiconductor shortage, which led to an estimated production loss of 90,000 vehicles, it said in a conference call with investors.
While Maruti expects the supply of chips to improve gradually, it may not be able to reach full production in the next few months, the company said. However, its new vehicle launch pipeline will not be impacted because of the semiconductor shortage.
Maruti’s wholesale market share was 48%, and retail share was 49.9% in the December quarter, the company said, adding that its year to date market share is at 44%, and it may not be able to reach its peak 50% market share position this fiscal. However, it is counting on its new product cycle to help it reach those levels in the mid-term.
Maruti Suzuki’s product launch plans for this fiscal are the most ambitious yet. The company plans to take on rivals Hyundai and Tata Motors in the competitive mid-size SUV market and may introduce sport utility vehicles fuelled by compressed natural gas. The management reiterated that the demand outlook remains strong.
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