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Commercial Vehicle axle manufacturer – Automotive Axles reported fall of whopping 66% to Rs 5.94 crore in net profit in June 2012 quarter on account of lower sales, weak operating performance worsened by higher interest and depreciation costs. The topline fell by notable 34% to Rs 181.81 crore on weak medium & heavy commercial vehicle demand (M&HCV) – its prime consumer industry. Higher costs and low sales led to 260 bps crash in operating profit margin (OPM). Thus the operating profit crashed by 48% to Rs 17.95 crore.
Automotive Axles is a joint venture between the Kalyani Group and Arvin Meritor Inc., US (formerly the automotive division of Rockwell International Corporation). Both promoters hold 35.52% each, totaling 71.04%.
Quarter Performance
The operating income fell by 34% to Rs 181.81 crore in June 2012 quarter impacted by sluggish demand in medium & heavy commercial vehicle industry (M&HCV) – its prime consumer industry. The M&HCV industry demand is impacted by high interest rates, lower manufacturing production and inflation thereby resulting in companies lowering their production/ resorting to temporary plant shutdowns in order to avoid pileup of inventory. This is reflected in 21% lower M&HCV production in June 2012 quarter.
On sluggish topline and higher cost, the OPM crashed by whopping 260 bps to 9.9%. Thus the operating profit crashed by notable 48% to Rs 17.95 crore. The staff cost, as % to sales net stock adjusted, grew by 230 bps to 7%. Also the other expenditure grew by 50 bps to 13%. The raw material cost grew by 60 bps to 71%.
The PBT crashed by 66% to Rs 8.87 crore on higher interest and depreciation cost. The interest cost grew by 29% to Rs 2.45 crore while the depreciation cost rose by 9% to Rs 6.85 crore. Only other income surged by impressive 273% to Rs 0.22 crore. Further hike in effective tax rate by 70 bps resulted in notable 66% crash in net profit to Rs 5.94 crore.
Nine Month Performance
In nine month ended June 2012, the topline grew by 5% to Rs 769.89 crore. Lower OPM by 50 bps to 11.9% led to flat 1% growth in operating profit to Rs 91.94 crore. Higher interest cost (by 70%) and depreciation cost (by 16%) resulted in 5% fall in PBT to Rs 66.35 crore. Saving grace was 200 bps fall in effective tax rate which thereby limited the fall in net profit to 2% to Rs 44.93 crore.
The promoters' share in the total shareholding remains unchanged at 71.04% in June 12 quarter. The promoters' have pledged ‘nil' shares of the company.
The scrip is currently trading at Rs 406.35 on BSE.
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