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India's Samvardhana Motherson misses Q1 profit view as higher costs weigh

Sep 29, 2023Sep 29, 2023

BENGALURU, Aug 10 (Reuters) - India's auto components maker Samvardhana Motherson International (SAMD.NS) on Thursday reported a smaller-than-expected jump in first-quarter profit, as higher expenses offset performance at its modules and polymer products division.

The company's consolidated net profit rose to 6.01 billion rupees ($72.60 million) for the quarter ended June 30 from 1.41 billion rupees a year earlier.

Analysts, on average, expected a profit of 6.25 billion rupees, according to Refinitiv IBES data.

"Macroeconomic factors stabilising at elevated levels while wage bill and interest rates continue to mount pressure on profitability," the company said in a statement.

Samvardhana's profit before tax from modules and polymer product segments, which make up for around 54% of revenue, nearly doubled, while the wiring harness business clocked a 61% jump.

The company also benefited from a recovery in vehicle production volumes in its key markets of China, Europe and North America, it said.

Analysts had said the company was likely to benefit from stabilising global automotive supply chains and cooling energy prices, while demand for commercial vehicles picked up.

Total revenue from operations rose 27% to 224.62 billion rupees. The company's expenses rose 24% to 216.29 billion rupees, including a 22.5% jump in input costs.

The company made two acquisitions in July, including the purchase of a majority stake in Japan-based auto part maker Yachiyo Industry's (7298.T) four-wheeler business from Honda Motor Co (7267.T) for about 22.9 billion Japanese yen.

It also bought German interior vehicle component maker Dr. Schneider Group for 118.3 million euros.

Rival Scaeffler India Ltd (SCHE.NS) reported its smallest quarterly profit growth since June 2020 hurt by a fall in demand for industrial products and flat margins in July.

Shares of Samvardhana Motherson closed down 3.5% after the results.

($1 = 82.7870 Indian rupees)

Reporting by Dimpal Gulwani in Bengaluru; editing by Eileen Soreng

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