Maruti Suzuki India Ltd., the nation’s biggest carmaker, said profit fell for the first time in five quarters, missing estimates, as increased raw material costs eroded gains from higher vehicle sales.
Net income fell 20 percent to 4.65 billion rupees ($99 million), or 16.11 rupees a share, in the three months ended in June, from 5.84 billion rupees, or 20.2 rupees, a year earlier, the unit of Suzuki Motor Corp. said in an e-mailed statement today. That was lower than the 6.7 billion rupee average of 24 analyst estimates compiled by Bloomberg. Sales rose 27 percent to 80.5 billion rupees.
Maruti’s spending on steel and other raw materials increased 26 percent in the quarter as a reviving global economy boosted prices of commodities. Competition for New Delhi-based Maruti is rising as Volkswagen AG, Nissan Motor Co. and other automakers introduce new compacts in Asia’s third-largest passenger-car market.
“Raw material prices have been a severe problem for auto companies,” said Umesh Karne, a Mumbai-based analyst at BRICS Securities Ltd. who has an ‘underperform’ rating on Maruti’s shares. “Increased competition is preventing the company from raising vehicle prices to absorb this cost.”
The carmaker, 54.2 percent owned by Japan’s Suzuki, sold 283,324 cars, vans and sport-utility vehicles in the quarter in India and overseas, compared with 226,729 a year earlier. Exports climbed 38 percent.
Euro, Royalty
The weakening of the euro during the quarter hurt income from exports, Maruti said in the statement. The euro fell 5.8 percent against the Indian rupee during the quarter, according to data compiled by Bloomberg. Europe accounted for as much as 80 percent of the company’s export revenue, Chief Financial Officer Ajay Seth said in April.
