Maruti Suzuki Q1 Results: First Loss Since Listing As Sales Take Lockdown Hit
Maruti Suzuki India Ltd. reported its first loss since listing in 2003 after the Covid-19 lockdown disrupted operations for most part of the first quarter.
India’s largest carmaker recorded a loss of Rs 249.5 crore in the April-June period compared with a profit of Rs 1,435.5 crore a year ago, according to an exchange filing. Analysts tracked by Bloomberg had pegged the loss at Rs 341 crore.
Lower operating expenses and higher fair-value gain on the invested surplus, however, partially cushioned the company, it said.
Maruti Suzuki's revenue declined 79.2% to Rs 4,106.5 crore, in line with the Rs 4,128-crore estimate.
The company suffered an operating loss of Rs 863.4 crore compared with an operating profit of Rs 2,228 crore in the year-ago period. It reported a deferred tax reversal of Rs 120.6 crore in the reported quarter.
Sales of the maker of Swift Dzire fell over 80% year-on-year during the quarter as the Covid-19 pandemic led to a washout in April. The demand recovered slightly in May and June after the nation eased the lockdown curbs. A complete recovery, however, is still some time away as Indians are reluctant to spend amid job losses and salary cuts even as companies have seen pent-up demand.
“With carefully designed safety protocols, which went far beyond compliance levels, the production in the whole quarter was equivalent to just about two weeks’ of regular working. The results have to be viewed in this context,” the company statement said.
According to RC Bhargava, chairman at Maruti Suzuki, supply is the bigger problem as the rising Covid-19 numbers and increasingly lax attitude of people is making it difficult for the industry to resume smooth operations. The most urgent of the problems is the lack of manpower, which affects the end product and the components that go into making a car, he had told BloombergQuint in an interview earlier this month.
Bhargava said the need for personal mobility is likely to increase demand for smaller cars. As for June, the company recorded better sales in rural areas as demand remains restricted in cities and towns due to lockdowns.