Mumbai: Auto-parts maker Motherson Sumi Systems Ltd reported a 20% rise in fourth quarter profit on higher sales due to a recovering automobile market, beating analysts expectations and boosting shares.
Motherson’s consolidated fourth quarter net profit rose to Rs769 million from Rs643.7 million a year ago. Total income increased to Rs8.4 billion from Rs5.97 billion.
Analysts polled by Reuters were expecting net profit at Rs352.5 million on sales of Rs5.68 billion.
“We are quite diversified and we have been increasing penetration in different pockets, we have also been continuously adding content per car,” Motherson Sumi’s chief operating officer Pankaj Mital told Reuters.
“As our customers come up with newer models, we have more products to supply to them,” adding that the firm took full advantage of the recent turnaround in automobile sales.
In India, higher borrowing costs and an economic slowdown put the brakes on auto sales for much of 2008-09, but sales have improved since February, helped by fiscal stimulus packages and rate cuts.
Motherson Sumi makes a range of auto parts from rear-view mirrors to wiring harness and high-tension cords. It also makes products for the construction equipment sector.
It counts almost all the major auto makers including Maruti Suzuki, Hero Honda, Mahindra & Mahindra and Tata Motors as its clients.
“Our consolidated revenues also include about a month’s sale of Samvardhana Motherson Visiocorp Solutions,” Mital said, referring to the firm’s acquisition of UK-based Visiocorp’s rear-view mirror business in March, which was later renamed.
In 2008, sales of Visiocorp globally was about €660 million.
For FY09, Motherson’s consolidated net profit was almost flat at Rs1.76 billion, while sales rose 28% to Rs25.96 billion.
“Going into the future, definitely the complete sales (of Visiocorp) will get added. That would lead to revenue growwth. Plus, the Indian automotive market is also performing much better now”.
“As new models keep coming in...and more technology goes in, that leads to more content through our joint ventures and our units,” he added.
Shares of Motherson Sumi rose 19% to Rs79.9 following the results. They later eased gains and closed up 11.97% at Rs75.30 in the Mumbai market.