Car market leader Maruti Suzuki has posted a drop in profits for the third consecutive quarter.
Earnings for the fourth quarter ending March 31 fell three per cent, though it managed to arrest the sharper drop seen in the third (64 per cent) and second quarter (60 per cent) of the fiscal.
Adverse foreign exchange movement on rising yen and depreciating rupee had a 2 per cent impact on the topline and higher commodity prices by 2 per cent. High discounting, largely on petrol models, had a 0.5 per cent impact.
“There was an exchange rate loss of Rs 34 crore in the fourth quarter. However, we had a mark-to-market reversal of Rs 50 crore from the third quarter — so, on a net basis across the second half we were positive,” Mr Ajay Seth, CFO, said.
Net sales in the fourth quarter were, however, up 17 per cent. Royalty outgo for the period was 5.1 per cent of net sales and 5.5 per cent for the whole year.
After two years, profits fell in FY12 by 29 per cent, while net sales also dipped 3 per cent. Maruti also lost production of over one lakh units in the year due to a 33-day strike at its Manesar plant, while sales were sluggish as the sharp rise in diesel car demand could not be met due to production constraints.
Discounts offered in the year were the highest ever, with an average of Rs 13,250 across the portfolio (diesel included). The Alto could be had for Rs 25,000 less, while the Kizashi premium sedan saw around Rs 1 lakh being rubbed off the sticker price.
Outlook
New models and improved market sentiments due to lower inflation and reduction in interest rates, are expected to boost sales in FY13. “The industry association expects a 10-12 per cent rise in car sales. We stick to that,” Mr Mayank Pareek, Managing Executive Officer for Marketing & Sales, said.
However, rising fuel prices at home and a weak European market demand for exports are seen as possible spoilers.
In FY12, diesel car sales rose 37 per cent, while petrol car sales fell 14 per cent.