Bharat Forge Q4 profit doubles at Rs 119 crore

Company's performance driven by series of order wins across segments and geographies from new and existing customers

Order wins across segments and geographies and strong traction in Europe and Asia Pacific regions saw Bharat Forge’s net profit double for the quarter ended March 31, 2014. The company also had a higher other income and exceptional gain during the quarter.

The forging giant reported net profit of Rs 119 crore for the fourth quarter of FY14, compared to Rs 50.1 crore for the same period last year. The company’s revenue touched Rs 943.35 crore during the quarter, an increase of 34 per cent over Rs 697.52 crore posted during the corresponding period of the last fiscal.

B N Kalyani, chairman and managing director, Bharat Forge expects strong growth momentum in FY15. “Topline growth expected to outpace the underlying market growth in all geographies driven by market share gains and new programs coming on stream. Looking ahead into Q1 FY15, we anticipate demand to be slightly higher compared to Q1 FY14 & Q4 FY14,” he added.

For the full year the company reported consolidated net profit of Rs 498 crore, up 102 per cent from Rs 247 crore last year, revenues increased 30 per cent to Rs 6,716 crore for the fiscal 2013-14.

“The uncertain demand environment which prevailed during FY14 is beginning to change positively especially in the external markets and we expect both North America & Europe to grow in FY15. The domestic market might witness demand recovery in second half of  FY15. The highlight of the year is the series of order wins across segments & geographies from new and existing customers and our investments in R&D delivering path breaking solutions to our marquee customers placing us at the forefront to capture demand revival,” said Kalyani.

Bharat Forge continued to see momentum in international markets, especially Europe and Asia Pacific. In FY14 Europe grew by 34 per cent and Asia Pacific by 37.9 per cent. The export markets both in North America & Europe had a strong end to CY13 with the Heavy Truck market in both geographies witnessing volume growth.

The European Heavy Truck segment witnessed volume increase of 8.3 per cent in CY13 but this was primarily driven by strong growth in Q4 CY13 on account of pre-buy in advance of new emission norms starting from January 2014.

FY14 was the second consecutive year of volume decline for the automotive sector in India, recording a 7.4 per cent decrease compared to FY13 with slowdown in economic growth and higher interest rates continuing to weigh in on demand.

The impact was evident on BFL’s numbers. BFL’s main market, the M&HCV segment witnessed a steep decline of 21 per cent in FY14 compared to FY13 and almost a 45 per cent decline from the highs of FY12. The volume performance was impacted by slowdown in industrial activity resulting in underutilization of fleets.

The demand sluggishness was not restricted to the automotive industry. Slowdown in industrial activity & lack of capital investment continues to have an impact on demand for forged components for industrial sector across segments.