Maruti misses street view as Q2 profit skids 65% on higher costs, chip shortage

Maruti Suzuki on Wednesday reported a massive 65% decline in its standalone net profit for the second quarter ended September, dragged down by higher commodity prices and production constraints.

India’s largest carmaker posted a net profit of Rs 475 crore for the July-September quarter, down from Rs 1,371 crore a year earlier. That’s far below estimates by analysts, who had projected profit to be around Rs 700-750 crore.

The profit, Maruti said, was impacted on account of rising commodity prices as well as a decline in sales volume due to the global shortage in electronic components (microchips), which are also used in automobiles. 

Net sales for the three months grew 9% to Rs 19,297 crore from Rs 17,689 crore from a year earlier.

Maruti Q2: Other highlights

1) Maruti sold 379,541 units in the second quarter, down from 393,130 units a year earlier.

2) Local sales fell to 320,133 units from 370,619 units a year earlier while exports rose to 59,408 units from 22,511.

3) The company could not produce 116,000 vehicles because of the electronic component shortage, leading to lower capacity utilization.

4) Maruti recorded a 5.6% increase in revenue to Rs 20,539 crore from Rs 19,378 crore in the same quarter last year.

5) EBITDA was up 8.9% at Rs 854 crore, although it remained lower than most estimates.

6) EBITDA margin came in at 4.16% as compared with 4.4%, again lower than analysts’ estimates.

Maruti commentary

The company said that the second quarter was marked by an unprecedented increase in the prices of commodities like steel, aluminium and precious metals within a span of one year. 

“The company made maximum efforts to absorb input cost increases offsetting them through cost reduction and passed on minimum impact to customers by way of car price increase,” Maruti said.

Due to rising input costs, the company has already hiked the prices of its models four times this year, with the last such hike coming in September. This, even as it hopes that the ongoing festival season will help push up demand.