Maruti net up 60% in Q4, annual profit best

Maruti Suzuki India on Monday reported a 60.5 per cent jump in net profit at Rs 1,284 crore for the quarter ended March, beating analysts’ estimates. For 2014-15, the company reported a profit of Rs 3,711.2 crore, its highest annual profit ever.

For the March quarter of 2013-14, net profit stood at Rs 800 crore; for 2013-14, profit stood at Rs 2,783.05 crore.

On Monday, the Maruti Suzuki India stock closed at Rs 3,646.7 on the BSE, up 3.02 per cent.

The country’s largest car maker has attributed the jump in profit to improving consumer sentiment, a weaker yen, higher realisation and lower raw material costs. “The main reason for the increase in profit has been higher volumes. To a large extent, what has helped is lower material cost and favourable foreign exchange, as well as lower commodity prices,” said Maruti Suzuki India Chairman R C Bhargava.

The company’s revenue increased 12.3 per cent to Rs 13,272 crore during the quarter from Rs 11,818 crore in the year-ago period. Operating profit margin rose by 551 basis points to 15.88 per cent from 10.63 per cent in the corresponding quarter of 2013-14. The company has said the primary reason for the rise in margin was a fall in raw material costs as percentage of sales (from 73.31 per cent to 67.69 per cent).

In the March quarter, the average realisation per vehicle increased 5.23 per cent (year-on-year) to Rs 3.82 lakh, backed by new launches and lower discounts. The company sold 346,000 cars during the quarter, up 6.72 per cent annually.

For the quarter, Maruti announced the highest-ever dividend. It said for 2014-15, its board of directors had recommended dividend of 500 per cent, Rs 25 a share of face value Rs 5. In 2013-14, the dividend was 240 per cent, Rs 12 a share of face value Rs 5.

On the outlook for the next year, Bhargava said, “Our estimate is 10-11 per cent growth in volume terms…The environment…fuel prices are low, inflation is low but a reason of concern is the sluggish economy.”

The royalty Maruti pays to its parent Suzuki has come down because of a favourable foreign exchange rate. In 2014-15, the overall royalty paid stood at Rs 2,788 crore, or 5.7 per cent of net sales; in 2013-14, it was Rs 2,604 crore (6.1 per cent of net sales).

Bhargava said while the company had been extending its rural reach, it needed to be enhanced further. “Currently, we are present in 125,000 villages. We would like to add another 25,000 villages this year. The rural market wasn’t so good last year but our rural sales rose to 35 per cent of total sales from 32 per cent earlier,” he added.

On export markets, Managing Director and chief executive Kenichi Ayukawa said the company was looking to maintain last year’s level of 121,000 units. “Africa and West Asia have been good and we managed to export 100,000 cars in non-European Union countries,” he said.

Shares of Maruti Suzuki India ended the day (Monday) at Rs 3,646.70 per scrip, up 3.02 per cent from the previous close on the Bombay Stock Exchange (BSE).