Maruti Suzuki Q2 net surprises Street with three-fold jump in Q2 net profit to Rs670 cr

Maruti Suzuki Ltd, India's largest car manufacturer, has reported a three-fold year-on-year increase in its quarterly profit to Rs670 crore. Its net profit also expanded 6 per cent during the July-September 2013-14 quarter on a sequential basis.

Maruti Suzuki said it saved on import costs through increased import substitution against the backdrop of a falling rupee and rising dollar.

"Higher localisation and cost reduction initiatives by the company contributed significantly to bottomline growth. The overall impact of foreign exchange was positive during the quarter," the company said in its release.

The numbers, however, are not comparable on year-on-year basis as Maruti's Manesar plant was shut for a month during July-September quarter of 2012.

Total income increased 2.25 per cent to Rs10,468 crore in three months ended September 2013 from Rs10,237.3 crore in the previous quarter ended 30 June.

Operating profit margin grew 150 basis points sequentially (up 680 basis points year-on-year) to 12.9 per cent during September quarter, aided by raw material cost reduction. "100 bps jump in margins is due to forex benefits from Q1," Maruti said.

Maruti Suzuki sees adverse impact on margins in Q3 due to indirect import. Although rupee depreciated by around 10 per cent Q-o-Q during September quarter, which is a negative for Maruti, its impact on margins will be limited.

The impact will be seen in Q3 rather than Q2 as the direct impact is offset by exports, and the indirect impact hits with a one quarter lag.

Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 13.3 per cent Q-o-Q (up 160 per cent Y-o-Y) to Rs1,321 crore in the quarter ended 30 September 2013.

Other income for the quarter was Rs101 crore against Rs156 crore during the year ago quarter and Rs204.3 crore in June quarter.

Total sales jumped 20 per cent sequentially to more than 2.75 lakh units in Q2, out of which 34,024 units were exported, a 66.6 per cent jump.

However, for the period of October-March FY14, the company is unable to predict volumes due to macro-economic uncertainty.

Meanwhile, Shinzo Nakanishi resigned as director and Toshihiro Suzuki was appointed as director with effect from today.

Keiichi Asai resigned from the post of director and managing executive officer (Engineering) while Masayuki Kamiya was appointed director and whole-time director designated as director (production) with effect from today.