Bosch reports 24% drop in Q4 net

Bosch Limited, the flagship company of Bosch group in India and supplier of automotive components to OEMs, today reported a drop of 24 per cent in its net profit at Rs 94.22 crore for the fourth quarter ended December 31, 2008 compared to the corresponding quarter last fiscal. The drop in profits is mainly on account of slowdown in the automobile industry led by commercial vehicles and passenger cars and delay in orders.

Its net sales for the period also dropped 13 per cent to Rs 974.40 crore compared to the same period last year. The operating profit for the quarter has seen a drop of 51.4 per cent to Rs 70.1 crore as compared to the same period last year. The company also temporarily shutdown its production units across the country to adjust the inventory levels due to slowdown in the market and reduced its expenditure mainly on consumption of raw materials and employee costs.

V K Viswanathan, managing director, Bosch said, “We have taken a hit in our profits mainly on account of general economic slowdown and particularly the commercial vehicles and passenger car sales were down in the fourth quarter of last fiscal. We had to suspend our production to adjust to the inventory levels in line with our customers.”

For the full year ended December 2008, Bosch reported a marginal rise of 4 per cent in its net profit at Rs 633.86 crore compared to 2007.

Its sales turnover including income from operations was up 6.4 per cent to Rs 4,619.86 crore. Its operating profit for the full year was down 16.3 per cent to Rs 572.34 crore compared to the previous year.

“Our growth last year was significantly below our plan and expectation due to the sharp and sudden slowdown in the Indian economy in general and the automotive sector in particular in the fourth quarter of 2008.The stimulus packages announced by the Government of India are expected to improve the demand in domestic market from the lows of December 2008,” Viswanathan said.

The company’s Automotive Technology business achieved a growth of 4.3 per cent in 2008. Notable among these are the Automotive Aftermarkets business which grew by 19.3 per cent and the Gasoline business by 54.6 per cent, albeit on a small base. The Heavy Commercial Vehicles segment is the hardest hit in the automotive sector and this had an adverse effect on the company's business in the year under review.

The non-automotive business of the company showed a 25 per cent growth to reach Rs 494 crore during the year. The packaging technology business grew by 12.7 per cent, whereas the Power Tools and Security Systems businesses grew by 27.7 per cent and 21.4 per cent respectively.

"Bosch has been the pioneer of Low Price Vehicle solutions in the Indian market. The market for such vehicles is expected to grow substantially in the coming years, which will generate additional business for the company," Viswanathan said.

Following the parent company’s decision to sell its car multimedia aftermarket business (Blaupunkt) to Aurelius AG worldwide, Bosch India proposes to sell its Blaupunkt business to the Indian entity of Aurelius AG on a going concern basis at a consideration to be determined in due course. However, the sale of this division has no significant impact on the financial results of the company.

The board of directors at a meeting held here today, recommended a dividend of Rs 25 per equity share for the year, subject to shareholder approval.