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Munjal Showa reported poor earnings for the third quarter ended Dec 2017. On a 7% topline growth, the company registered 23% drop in net profit. Poor performance at the operational level coupled with lower other income hit the bottomline.
Established in 1985, in technical and financial collaboration with Showa Corporation of Japan, Munjal Showa is among the pioneering global leaders in the manufacture of shock absorbers.
Munjal Showa products serve as original equipment to a wide range of Maruti Suzuki upper end cars and export models, Honda City car, complete range of Hero Honda Motorcycles, Kawasaki Bajaj Motorcycles, and Hero range of mini-motorcycles and mopeds and Honda Motorcycles and Scooters India (Pvt) Limited. In over a decade the Company's state-of-the-art Shock Absorbers, Front Fork, Struts and Window Balancers/Gas Springs have become symbols of reliability and quality for popular two and four wheeled vehicles.
Quarterly Performance:
For thethird quarter ended Dec 17, the company has reported 7% increase in the total income from operations at Rs351.88crore. The raw material cost as % of sales net of stock adjustments rose 90 bps to 74%. The other expenses (as % of sales net of stock adjustments) rose 25 bps to 11.8%. Employee cost fell by 40 bps to 8.9%. Resultantly, operating margins dropped 70 bps to 5.3% leading to 5% drop in operating profit to Rs18.62 crore.
With 49% drop in other income to Rs4.41 crore (vis a vis Rs8.58 crore), PBIDT decreased by 18% to Rs23.03crore. The company's interest cost was stagnant at Rs 1 lakh and depreciation charges rose 3% to Rs7.13 crore. Thus, profit before tax decreased by 25% to Rs15.89 crore. After 30% dropin tax provision at Rs4.69 crore, (220 bps dropin tax rate), the company's net profit fell 23% at Rs11.2crore.
Nine Month performance:
For the nine month ended Dec 17, Munjal Showa's topline registered 5% growth to Rs 1162 crore. OPM dropped 30 bps to 6.6% leading to steady operating profits at Rs 76.4 crore. The raw material cost as % of sales net of stock adjustments rose 77 bps to 74%. The other expenses (as % of sales net of stock adjustments) fell 40 bps to 11.4%. Employee cost was steady at 7.9%.
With 5% drop in other income to Rs14.11 crore (vis a vis Rs14.78 crore), PBIDT decreased by 1% to Rs90.5crore. The company's interest cost stood at Rs 9 lakh vis a vis Rs 2 lakh and depreciation charges fell 1% to Rs21.55 crore. Thus, profit before tax decreased by 1% to Rs68.88 crore. After 5% drop in tax provision at Rs20.05 crore, (130 bps dropin tax rate), the company's net profit rose 1% toRs48.83crore.
Shares of Munjal Showa closed 1.8% lower around Rs277.75 at BSE on 31 Jan 2018, the day earnings were announced.
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