Suzuki Motor Corp., the parent of Maruti Suzuki India Ltd, on Thursday forecast a double-digit decline in net profit and revenue this fiscal year, saying it will not be able to recoup the losses in vehicle sales in India and Japan in the June quarter following the pandemic-related restrictions.
The Japanese automaker though made significant sales recovery, sequentially, during the September quarter, after the lockdown measures were eased.
The Hamamatsu-based company expects an 18% fall in net profit to 110 billion yen ($1.06 billion), while net sales may decline by 14% to 3,000 billion yen ($29 billion) in FY21. It expects operating profit to drop 25.6% to 160 billion yen ($1.5 billion).
Its local unit, Maruti Suzuki India Ltd, contributes more than half of Suzuki’s revenue and profit. This makes Suzuki heavily reliant on its operations in India, where Maruti is the top carmaker.
The strict lockdown measures imposed in India to curb the pandemic adversely hit sales of Maruti. The New Delhi-based company reported its first quarterly loss in two decades in the June quarter. Vehicle sales in Japan also plunged during the period due to covid-related restrictions.
In the June quarter, Suzuki’s net profit declined by 31.5% year-on-year to 54.3 billion yen, following a 27.6% drop in net sales to 1,270.2 billion yen. During the quarter, the company reported a 31.4% drop in passenger car sales and 23.2% for motorcycles. Consequently, operating income fell 36.8% to 74.9 billion yen.
The lockdowns in India and Japan during the quarter drastically reduced operations at factories of both Maruti and Suzuki. There was also disruptions to parts supplies from vendors. “In the July-September period, the company gradually restarted production and sales activities in accordance with the lifting of lockdown orders in Japan and India, which are the important markets for our group. However, it is uncertain when the new coronavirus infection will end in India. In addition, a second wave of the new coronavirus is a concern in Japan and mainly northern hemisphere countries, where winter approaches. Therefore, the severe situation that the company needs to pay attention to is expected to continue," Suzuki said in a statement.
Maruti though made a swift recovery in production and sales, since the easing of lockdown measures in May. It reported a net profit of ₹1,371.6 crore in the September quarter on the back of a 16.2% y-o-y jump in sales to 393,130 vehicles and 9.7% increase in net sales. In the June quarter, the company sold just 36,775 units.
Since May, Maruti saw a sharp increase in sales, especially of entry-level hatchbacks, following a recovery in demand in the rural markets and shift in customer preference for personal mobility to avoid coronavirus infection.
November 06, 2020 at 09:53AM
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Suzuki sees double-digit decline in FY21 net profit - Mint
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