 "Maruti Suzuki")
Maruti Suzuki has said it will continue to witness pressure due to surge in input materials cost even though the company sees better-than-expected recovery in demand.
Operating margin stood at 4.8 per cent compared to 8.6 per cent in the previous quarter while profit fell for the second straight quarter, missing estimates, as local lockdowns to curb the deadlier second Covid-19 wave disrupted production and sales.
Net profit of India’s largest carmaker slumped 62 per cent sequentially to Rs 440 crore in the quarter ended June. It sold 25 per cent fewer vehicles than the preceding quarter, at 353,000 units, as companies were forced into phased shutdowns.
Though the company tried to pass on some of the increased cost to customers by undertaking three rounds of price hikes since January, it expressed inability to take any significant price increase. This would hit recovery of demand in a market suffering from poor consumer sentiment.
“We have never seen such a steep increase in commodity prices before and we will continue to see an increase at least till the end of next year. We have taken gradual price increases like we took a small round of increase in July. But there is a limit to taking a hike without disturbing the calibration of demand,” said Ajay Seth, chief financial officer (CFO) at Maruti Suzuki.
Auto sales have been in the slow lane even before the pandemic. Two waves of Covid-19 have washed away gains, forcing automakers to shut production and dealerships. There have also been loss of jobs or severe cut in salary.
Operating margin stood at 4.8 per cent compared to 8.6 per cent in the previous quarter while profit fell for the second straight quarter, missing estimates, as local lockdowns to curb the deadlier second Covid-19 wave disrupted production and sales.
Net profit of India’s largest carmaker slumped 62 per cent sequentially to Rs 440 crore in the quarter ended June. It sold 25 per cent fewer vehicles than the preceding quarter, at 353,000 units, as companies were forced into phased shutdowns.
Though the company tried to pass on some of the increased cost to customers by undertaking three rounds of price hikes since January, it expressed inability to take any significant price increase. This would hit recovery of demand in a market suffering from poor consumer sentiment.
“We have never seen such a steep increase in commodity prices before and we will continue to see an increase at least till the end of next year. We have taken gradual price increases like we took a small round of increase in July. But there is a limit to taking a hike without disturbing the calibration of demand,” said Ajay Seth, chief financial officer (CFO) at Maruti Suzuki.
Auto sales have been in the slow lane even before the pandemic. Two waves of Covid-19 have washed away gains, forcing automakers to shut production and dealerships. There have also been loss of jobs or severe cut in salary.
