Maruti Suzuki profit falls 4.6% in Q4 as sales stay flat

Country's largest carmaker Maruti Suzuki India Ltd on Thursday posted a 4.6% year-on-year decline in its net profit at Rs 1,795.6 crore for the January-March quarter owing to fluctuations in foreign exchange, commodity prices, higher depreciation and discounts.

Net sales were up 0.7% at Rs 20,737.5 crore for the reporting March while total vehicle sales for the quarter ended March stood at 458,479 units, a decline of 0.7%.

For the full year, the company posted a net profit of Rs 7,500.6 crore, a 2.9% decline year on year. Net sales rose 6.3% to Rs 83,026.5 crore in the last fiscal. Total volume sales grew 4.7 % to 18,62,449 units. It sold 17,53,700 units in the domestic market, a growth of 6.1%.

The company has given a growth forecast of 4-8% production and sales in the current fiscal. Last year, the company had targeted growth of 10%, but actual growth stood at 6.1 %.

"This quarter was marked by adverse foreign exchange rates and commodity prices, higher depreciation and higher sales promotion expenses partially offset by cost reduction efforts," the company's chairman R C Bhargava said.

For the current fiscal, the company earmarked a capital expenditure of Rs 4,500 crore for new product development, R&D and land acquisition for sales network, Ajay Seth, chief financial officer, said. It had capex of Rs 4,000 crore for 2018-19.

"This was a difficult year because of adverse foreign exchange rates and an increase in commodity prices. The second SMG plant in Gujarat was commissioned, leading to a higher depreciation expense. The overall market was slow and had to be supported by higher sales promotion expenses. This was partially offset by cost reduction efforts," Bhargava said.

"We have decided that this year that instead of a fixed target we will give a range of what we hope to achieve. The lower range would be 4%, and the upper range would be 8 %, keeping in mind the first quarter will anyway be subdued is 8%. We have three quarters to grow," he said.

The company's Board of Directors has recommended a dividend of Rs 80 per share -- the same as that of last year. "Since profit has gone up, we thought it would not be justified to increase dividend further," he said.

"During the last three quarters, the market has been very soft. Everything seems to slow down before the elections, he said, adding we cannot expect the market to pick up post elections automatically. There are some favourable factors such as stock market going up and when this happens the growth of the economy and auto sector is not far behind. Also, the monsoon prediction is favourable," he said.

However, there is uncertainty around petrol prices, especially after Iran issue, he said, adding BS VI is around the corner and the new regulations of safety which will lead to increase in prices.