TVS Motor Company Ltd, India’s third largest two-wheeler manufacturer, on Thursday reported a 13% year-on-year fall in its standalone income for the quarter ending September due to subdued domestic sales across its product portfolio. The company reported a total income of ₹4,353 crore for July-September compared with ₹4,994 crore in the year-ago period.
The company’s total vehicle sales stood at 8,86,000 units during the quarter under review, down 19% year-on-year. While three-wheeler volumes grew during Q2, all other vehicle categories, including motorcycles, scooters and mopeds, saw a decline in the second quarter.
TVS Motor also reported a sharp 30% decline in sales of mopeds during Q2, thanks to high rural exposure and as the category possibly faced the worst impact of increase in insurance costs. However, two-wheeler exports, the company said, rose 4% YoY during the last quarter.
Notably, TVS Motor’s profit before tax (PBT) for Q2 stood at ₹310 crore as against ₹306 crore in the year-ago period. The spike in PBT was on account of an exceptional gain of ₹76 crore in the form of reversal of NCCD provision for Himachal plant pertaining to earlier years, the company said in a statement. As a result, the company’s net profit for the period stood at ₹255 crore, up 21% YoY.
The company management lowered its guidance for FY20 domestic two-wheeler industry, citing delayed economic recovery.
While TVS Motor has been focusing on cost reduction across operations, September quarter results underscore a substantial drop in total expenditure, primarily driven by reduced cost of materials consumed. Total standalone expenditure for Q2FY20 stood at ₹4,118 crore as against ₹4,688 crore in year-ago period. The cost of materials consumed saw savings of about ₹550 crore in the fiscal second quarter.
On the consolidated front, while the total income for Q2FY20 stood at ₹4,967 crore, down 9% YoY, PAT was at ₹257 crore, up 15%. The company said its EBIDTA (earnings before interest, tax, depreciation and amortization) margin for Q2FY20 stood at 8.8% compared with 8.6% in Q2FY19 and 8% in Q1FY20.