The fall was its fourth consecutive quarterly drop in profits as weakening currency led to increase in expenditure. The increase in other expenditure was mainly led by unfavorable forex impact on royalty payments (140 bps YoY) and sharp drop in other income.
Maruti Suzuki India Ltd, 54.2 per cent owned by Japan’s Suzuki Motor Corp, said net profit fell to Rs 424 crores for the three months to June from Rs 549 crores a year earlier.
At 09:20 a.m., Maruti Suzuki India Ltd was trading 1.8 per cent lower at Rs 1091. It has hit a low of Rs 1082.30 and a high of Rs 1095.75 today.
“Operating margin declined 230 bps YoY to 7.3 per cent due to foreign exchange impact on royalty (up 140bp) and 100bp increase due to increase in power & fuel and commodity/forex loss leading to 3 per cent YoY decline in operating profit,” Yaresh Kothari, Research Analyst- Automobile at Angel Broking, said.
“However, net income declined 22.8 per cent YoY due to sharp decline in other income and increase in interest expense,” added Kothari.
“The shutdown at the Manesar plant threatens a replay of a dismal 2011 when labour unrest battered the company’s sales, market share and profit,” Reuters reported.
However, the results released on Saturday are for the three months to end-June, and as such are not affected by the shutdown.
Maruti faces months of supply woes and a slump in market share and sales as a lockout at a key factory enters its second week after violent clashes between workers and management left one company official dead,” Reuters reported.
Shares of Maruti Suzuki have plunged more than 9 per cent since it announced the shutdown of its Manesar plant on July 18 while so far in 2012 they have given an impressive return of over 20 per cent.