India’s leading carmaker Maruti Suzuki reported a profit for the first quarter of FY22, but it was lower than the preceding quarter due to increased taxes and lower sales caused by the Covid-19 disruptions.
The Indian unit of Japan’s Suzuki Motor Corporation reported a stand-alone profit of 4.48 billion rupees (US$ 60.16 million) for the April-July quarter, down 62% from 11.66 billion rupees in the January-March quarter.
“The company’s operations and financial results for the quarter ended June 30, 2021, have been adversely impacted by the outbreak of Covid-19 pandemic and the consequent lockdown announced by the State Governments due to which the operations were suspended for part of the quarter and gradually resumed with requisite precautions,” the company said in a statement.
The Delhi-based automaker also missed Street estimates. Analysts had expected a stand-alone net profit in the range of 7.87-9.87 billion rupees.
However, the current numbers are much higher than the year-before period when the company posted a net loss of 2.49 billion rupees. It may be recalled that India had imposed a strict countrywide lockdown from March 25 to May 25 last year and factories and showrooms had remained closed during the period.
Maruti Suzuki sold a total of 353,614 units during the first quarter, as against 76,599 units in the same period last year. This quarter the domestic market sales were 308,095 units, while 45,519 units were exported.
During the first quarter, Maruti Suzuki’s revenue was 117.7 billion rupees, 26% lower than 240.23 billion rupees in the preceding quarter. However, it rose 333% from the year-ago revenue of 41.06 billion rupees.
The rising commodity prices, from steel to copper, also took a toll. Maruti Suzuki said its material costs rose almost 200 basis points sequentially as a percentage of revenues. The company has not been able to fully pass on the costs to customers due to weak demand.
The carmaker had raised prices in January and April, and recently announced that another hike will come into effect in the current July-September quarter.
Maruti Suzuki has been tweaking the production of variants to work around the current semi-conductor shortage across the globe. Marketing Director Shashank Srivastava had recently said that the carmaker was altering its production pattern according to chip availability.
The Indian auto industry expects the issue to affect business adversely till the first half of 2021. The chip shortage was sparked by the global pandemic last year as countries went into a lockdown and auto companies shut factories.
The chip makers diverted their supplies to other sectors such as mobile phones and laptops. Now that the auto sector has resumed production, the demand for chips has soared but there is not enough supply.