(Bloomberg) — Maruti Suzuki India Ltd.’s profit missed estimates as a semiconductor chip shortage and surge in raw material costs hurt India’s largest carmaker.
Net income slipped 65% to 4.75 billion rupees ($63.4 million) in the three months ended Sept. 30, the unit of Japan’s Suzuki Motor Corp. said in a statement Wednesday. That fell short of the average analyst estimate of 6.9 billion rupees, according to data compiled by Bloomberg. Revenue climbed 9.6% to 205.4 billion rupees, beating estimates.
Key Insights
- Despite revenue being buoyed by strong demand rebound in the broader Indian economy as pandemic related movement curbs are eased, the carmaker flagged concerns around surging raw material prices. Total costs jumped 16%.
- “This quarter was also marked by an unprecedented increase in the prices of commodities like steel, aluminum and precious metals,” the company said in a statement
- Maruti is increasing car prices to partially pass on these inflationary pressures. It’s also making “maximum efforts” to absorb rising input costs, it said
- Shortage of electronic components decreased capacity utilization, according to Maruti, which said about 116,000 vehicles were not produced due to a dearth in electronic parts
- It has more than 200,000 pending customer orders as of September and is trying to expedite deliveries
- Maruti in August said it expected September output to plunge 40%. Parent Suzuki Motor Corp. cut its October production in Japan by 20% to 70,000 units, citing constraints in parts and semiconductor supplies.
Market Reaction
- Shares of Maruti closed 0.8% higher on Wednesday in Mumbai as investors cheered the better-than-expected jump in revenue.
- Its shares have retreated 3.8% this year while the benchmark S&P BSE Sensex has surged 28% in 2021.
Read More
- Chip Lead Times Begin to Slow, Suggesting Shortages Have Peaked
- Top India Carmaker Says Output to Drop 40% on Chip Crisis
- India’s Stricter Emissions Rules Will Hit Car Sales, Maruti Says
(Updates with details throughout.)
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
