Bosch Limited Q4 net profit declines 39% at Rs 172 cr

Higher provisions towards retirement benefits for employees, higher capital cost coupled with unfavourable exchange rate & inflation led to the drop in profits

Bosch Limited, the flagship company of the Bosch Group in India and supplier of automotive components to original equipment manufacturers (OEMs), on Wednesday reported 39% decline in net profit at Rs 172 crore for the fourth quarter ended December 31, 2012 compared to Rs 281 crore reported in the corresponding quarter last year.

Its total sales income was up 5.6% for the fourth quarter at Rs 2,056 crore as against Rs 1,946 crore in the year ago period. The operating profit for the period declined 43.8% to Rs 137 crore as against Rs 243 crore in the year ago period.

The decline in profit was mainly on account of higher provisions towards retirement benefits for employees and higher capital cost. “Unfavourable exchange rate and inflation leading to higher material cost and higher depreciation towards capital expenditure in addition to increased personnel cost added to the decline in net profit,” Steffen Berns, Managing Director, Bosch Limited said.

He said the company’s personnel costs increased by 1 percent to 12.2% of the total sales during the year 2012.

For the full year ended December 2012, Bosch Limited reported 14.6% drop in net profit at Rs 958 crore. The net sales and income from operations grew by 6.4% to Rs 8,511 crore during the year.

“The growth of the company was below previous year’s figure because of the weak automotive market and global economic slowdown. The economic downtrend continued into the fourth quarter. The overall automotive production increased marginally and the heavy, medium commercial vehicles and tractor segments, which contribute significantly to our business, declined sharply,” Berns said.

The company’s exports too declined due to the euro zone crisis and stood at Rs 940 crore, a decline of 9.1% over 2011.

The main contributors were the Starter Motors and Generators division, automotive aftermarket as well as the non-automotive business. “We are approaching 2013 with cautious optimism and with tight cost control until we see clear signs of improvement. We are convince of the strong growth perspectives of the Indian market in the mid and long-term and therefore continue our investments into new technology and capacity expansion for the future,” Berns added.