New Delhi: Maruti Suzuki India Ltd.’s profit narrowed and earnings trailed estimates as a resurgent Covid-19 outbreak hit consumer demand in Asia’s third-largest economy.
Net income fell 9.3% to 11.7 billion rupees ($157 million) in the three months ended March 31, the unit of Japan’s Suzuki Motor Corp. said in a statement Tuesday. That’s less than the average analyst estimate of 17 billion rupees, according to data compiled by Bloomberg.
Maruti’s production hasn’t been impacted by a surge in infections and the demand for personal transport will strengthen following the second wave, Chairman R.C. Bhargava said in a post-earnings call. If the current demand situation continues, April-June should be “decent,” he said.
The automobile industry saw a broad recovery in demand in the January-March quarter from a year earlier, when the country was grappling with the first outbreak of the pandemic. Still, margins were pressured by higher input costs, though product price increases may have helped partially blunt the impact. Meanwhile, the global shortage of semiconductors and other components remains an overhang on production.
India now is battling a more deadly wave of Covid infections which has prompted fresh lockdowns in some parts of the country, hit consumer demand and shuttered businesses again. Hero MotoCorp Ltd., the world’s largest maker of motorcycles and scooters, decided to halt operations temporarily at all its manufacturing facilities in view of the surge in Covid cases.
The government has restricted use of oxygen for non-medical purposes, which may affect Maruti.
“We’re small users of oxygen but our vendors are much larger users,” Bhargava said. He added that rising input costs are also a cause of concern as “there’s no way of getting a steel producer to commit to a fixed price of six months, we have to keep watching the situation.”
Revenue at Maruti Suzuki for the fourth quarter rose 32% year-on-year to 240.2 billion rupees. Maruti shares slipped 1.1% in Mumbai trade on Tuesday. –Bloomberg