Bajaj Auto,India’s second-largest motorcycle manufacturer,beat estimates with a 2 percent rise in net profit in the quarter to the end of September,but its operating margin slipped as sales fell across its portfolio.
Sales by the world’s largest manufacturer of three-wheeled rickshaws used for passenger and goods transportation have been hit by high interest rates and increased fuel costs in India and a tax hike in its important export market in Sri Lanka.
This was a challenging quarter for the industry at large,the company said in a statement on Saturday.
Bajaj’s operating margin the best in the industry slipped to 19.7 percent during the quarter,down from 20.1 percent a year earlier,as domestic sales of its motorcycles fell 12 percent,a larger fall than the overall market.
Bajaj owns 47.3 percent of Austrian motorcycle company KTM AG and has a tie-up with Japan’s Kawasaki Heavy Industries. Its market share in India has been challenged by overseas rivals such as Honda Motor and Yamaha Motor.
Net profit in the second quarter of the fiscal year that began in April stood at 7.41 billion rupees ($138 million),up from 7.26 billion rupees a year previously,beating market expectations of 7.24 billion rupees,according to Thomson Reuters I/B/E/S. Net sales fell 3.5 percent to 48.17 billion rupees.
Bajaj Auto Q2 net profit up 2%,vehicle sales down 10%
The country’s second largest two-wheeler maker Bajaj Auto today reported a mere 2.05 per cent rise in its standalone net profit for the quarter ended September 30 at Rs 740.67 crore due to decline in sales.
The company had posted a net profit of Rs 725.80 crore in the corresponding period last year,Bajaj Auto Ltd (BAL) said in a filing to the BSE.
The company’s net income during the second quarter of the current fiscal,however,declined by 4.11 per cent to Rs 4,972.40 crore from Rs 5,185.36 crore in the year-ago period,it added.
The total vehicle sales in July-September period also dipped by 9.87 per cent to 10,49,208 units from 11,64,137 units in the same period last fiscal,the company said.
However,the company’s overall spending during the last quarter went down by 3.56 per cent to Rs 4,098.23 crore from Rs 4,249.31 crore in the second quarter of FY’12. The company could reduce its expenses in raw material purchase by 4.39 per cent to Rs 3,446.23 from Rs 3,604.49 crore in the year-ago period,BAL said.
On its cash flows,BAL said the surplus cash and cash equivalents as on September stood at Rs 4,521 crore as against Rs 5,682 crore as on June 30 this year.
Commenting on the numbers,the company said: “The quarter was a challenging quarter for the industry at large. The motorcycle industry,which witnessed a CAGR of 15 per cent over last four years,witnessed a decline of about 9 per cent in Q2 of FY’13”.
The company’s performance has been “more than satisfying” amidst inflationary pressures,rising input costs,falling rupee and increase in fuel prices,it added.
“Company’s strategy to focus on the high-end motorcycle segment of the market together with its variable cost structure ensured that in a subdued market,there was no negative impact on operating leverage,” BAL said.
In the Q2 of FY’13,the company’s total motorcycle sales stood at 9,28,524 units compared to 10,27,357 units in the year-ago period,down 9.62 per cent.
“With the success of new launches,Baja Auto increased its share in domestic motorcycle market from 23 per cent in April to 27 per cent in September 2012,” BAL said.
For the overseas markets in the motorcycle segment,Africa continues to do well,while other major destinations such as Sri Lanka witnessed subdued demand in line with overall global slowdown,it added.
BAL’s three-wheelers saw a decline of 11.77 per cent in overall sales at 1,20,684 units in the second quarter as against 1,36,780 units in the same period last year. “Sale of commercial vehicles in domestic market is a reflection of the general economic conditions. During the quarter,industry remained flat,” the company said. However,with opening of new permits for three-wheelers,outlook for the coming quarters in the domestic commercial vehicle market segment is “encouraging”,it added.
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