Maruti Suzuki India smashed all forecasts by announcing highest ever 79.4 per cent jump in its standalone net profit for the quarter ended March 31 at Rs1,147.5 crore on the back of good sales of models like Ertiga, DZire and Swift. Maruti shares zoomed 5.26 per cent and ended the day at Rs1,673.45.
The company had registered a net profit of Rs639.8 crore during the corresponding period last year. Its profit becomes even bigger at Rs1,239.6 crore when the numbers of the merged entity Suzuki Powertrain India ltd (SPIl) are added.
The jump in net profit was driven by good sales of models like Ertiga, DZire and Swift, cost reduction and localisation effort and the benefit of a favourable exchange rate.
Net sales during the fourth quarter of the last fiscal went up by 9.4 per cent to Rs12,566.6 crore from Rs11,486.4 crore in the year-ago period. During January-March period, MSI sold a total of 3,43,709 vehicles, down 4.6 per cent from 3,60,334 units in the same period last year.
"The increase in net profit during the quarter was due to many factors, which included higher realisation on sales of new models such as Ertiga, DZire and Swift, ongoing cost reduction and localisation efforts, and the benefit of a favourable exchange rate," MSI Chief Financial Officer Ajay Seth told reporters here.
Stating that this was the highest quarterly profit for MSI, he said the company had posted its previous best quarterly profit in third quarter of 2009-10, which was at Rs688 crore.
“Maruti Suzuki’s (MSIl) revenues (pre Suzuki Powertrain India limited merger) have come in line with our expectation. Despite volume de-growth, MSIl reported 9 per cent growth in net sales (pre SPIl merger) driven by higher share of diesel sales and improved product mix. Operating profit received a big boost from favorable foreign currency movement during 4QFY13. Other income during the quarter came in higher due to capital gains. PAT came in strong, aided by improved operating performance and higher other income. Given favorable foreign currency movement, operating margins in FY14 is expected to stay strong,” said Auto Analyst, Kotak Securities Arun Agarwal.
For the entire 2012-13 financial year, MSI posted a rise of 40.7 per cent in its standalone net profit at Rs2,300 crore as against Rs1,635.1 crore in the previous fiscal, the statement said.
The company's standalone net sales went up by 21.4 per cent to Rs42,122.9 crore in FY'13 from Rs34,705.9 crore in FY'12, it added.
Total vehicle sales of the company during last fiscal fell by 3.3 per cent to 11,71,434 units from 11,33,695 units in 2011-12.
Commenting on the numbers, MSI's recently-retired Managing Director and CEO, Shinzo Nakanishi said: "The year 2012-13 was a challenging year for the entire auto industry due to a weak economy and poor consumer demand. However, we were able to improve our sales and also increase our market share in the passenger vehicles segment to 39.1 per cent."
He said demand for small cars during the year went down due to the overall economic situation.
"The industry saw a decline of 13 per cent in small cars sales, this was not a case of customers shifting to big cars. It is just that small car customers are have not buying while big car buyers continue to buy," Nakanishi added.
Commenting on the outlook for the ongoing fiscal, he said there were short term concerns but the company was bullish on the long term potential of the Indian market.
Kenichi Ayukawa, who took over as MSI's Managing Director and Chief Executive Officer from April 1, said: "Maruti has been a market leader for the last 30 years and I would like it to continue and at the same time I would also like to write a new page in the history of the company."
Analysts said pointed out that MSI's revenue gained traction from better pricing and an improved product mix.
"Strong contribution from diesel vehicle sales also contributed to growth as well as profitability," Motilal Oswal Securities Vice President (Equities) Gautam Sinha Roy said.
At its meeting on Friday day, the Board of Directors of MSI recommended a dividend of 160 per cent, which is Rs8 per share of face value Rs5 for 2012-13. The dividend in 2011-12 was at 150 per cent.
"The total outgo from the company on account of the dividend payment will be Rs288 crore," Seth said.The board has also approved merging of seven subsidiaries of the company with itself and a cash of Rs200 crore gets added to the books of MSI, he added.
In 2012-13, engine maker Suzuki Powertrain India ltd (SPIl) was merged with MSI. After considering the performance of SPIl, MSI's net profit during the fourth quarter stood at Rs1,239.6 crore, while the net sales were Rs13,056.3 crore.
likewise, MSI posted a standalone net profit of Rs2,392.1 crore for 2012-13 and net sales of Rs42,612.6 crore in the same fiscal after combining the figures of SPIl.