Leyland profit soars 93% on robust sales

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Commercial vehicles major Ashok Leyland has posted 93 per cent growth in its net profit for the quarter ended December 2006 compared with the previous year owing to a higher growth in vehicle sales on the back of a buoyancy in the commercial vehicle market and due to improved operating margins.

For the quarter ended December 2006, net profit stood at Rs 105.25 crore compared with Rs 54.50 crore in the corresponding period of the previous financial year.

Net sales grew by 48 per cent at Rs 1,777.59 crore at the end of the third quarter compared with Rs 1,201.17 crore in the same period previous financial year. Gross operating margin improved by 58 per cent to Rs 184.05 crore from Rs 116.09 crore while the gross profit was up by 70 per cent to Rs 187.84 crore from Rs 110.63 crore.

While financial expenses were reduced to Rs 2.56 crore from Rs 7.93 crore through efficient working capital management and control on assets employed, depreciation was higher at Rs 33.22 crore as compared to Rs 29.01 crore.

Profit before extra-ordinary items and tax stood at Rs 154.61 crore as compared to Rs 81.61 crore. "Our operating margins for the quarter were up 68 basis points, despite continuing pressure from input costs. Volume expansion and the resultant operating economies helped," said R Seshasayee, managing director, Ashok Leyland in a statement.

While vehicle demand remained robust, the company targeted a sales growth of over 30 per cent for the current fiscal, material costs were not expected to soften, he added.

The company saw its net profit growing by 39 per cent for the nine-month period ended December 31, 2006, to Rs 269.76 crore from Rs 193.86 crore in the same period a year ago. Net sales of the company was also up by 39 per cent at Rs 4877.18 crore as compared to Rs 3512.84 crore in the same period last year.