Motherson Sumi Expects ‘Strong’ FY20 Despite Global Auto Slowdown
The global auto industry is facing trouble due to U.S. import tariffs and Brexit, among others. Yet, Motherson Sumi Systems Ltd. is happy due to its strong order inflow and capacity expansion.
“We have new orders to the tune of Rs 1.47 lakh crore which is excluding the Rs 55,000-crore order from Daimler’s Tuscaloosa plant,” chairman of the maker of automotive wiring and mirrors, Vivek Chand Sehgal, told BloombergQuint in an interview. “Also, these Euro 6 compliant cars are expected to sell phenomenally well and overcome unevenness in the current global conditions.”
Sehgal said the company’s two plants in North America will add around $1 billion in revenue. “There is almost 33 percent growth in this company.” He said margin pressure in their flagship Samvardhana Motherson Peguform unit may continue as capacities of two of their plants is slated to double. The unit’s Ebitda margin declined to 1.9 percent in the quarter ended March from 6.7 percent in the year-ago period.
Capital expenditure plans in the form of large acquisitions and small-ticket buyouts for the year ending March 2020, Sehgal said, won’t be put on the backburner. “We will be busy (with acquisitions) as the gap of Rs 12 billion in current revenue and Rs 18 billion projected at end of the year is through acquisitions only.”
Whatever my peers are saying about the global situation is right. But the grim situation may turn out to be better as our acquisitions became relatively cheaper.Vivek Chand Sehgal, Chairman, Motherson Sumi
Motherson Sumi reported its March quarter results on Monday.
Key Highlights (YoY):
- Revenue up 11.4 percent to Rs 17,169.5 crore.
- Net profit fell 21 percent to Rs 410 crore.
- Ebitda down 17 percent to Rs 1,242.80 crore.
- Margin 7.2 percent versus 9.7 percent.
Shares of Motherson Sumi rose as much as 4.5 percent to Rs 121.40 apiece compared with a largely unchanged Nifty Index.