M&M’s Q1 net profit skids on lower volume

India’s largest sports utility vehicle (SUV) maker Mahindra & Mahindra (M&M) reported 94% decline in its consolidated profit at Rs 54.64 crore for June quarter 2020, adversely impacted by the coronavirus pandemic. It had posted a profit after tax of Rs 894.11 crore in the same period last fiscal

Revenue from operations during the June quarter stood at Rs 16,321.34 crore as against ₹26,041.02 crore in the year-ago period, down 37%. The automotive segment posted a revenue of Rs 6,508.6 crore in the first quarter, down from Rs 13,547.84 crore in the same period a year ago

The number of vehicles sold crashed by 78% to 27,565 units in Q1 FY21. Tractor sales came down by 22% to 64,140 units from 82,013 units while exports fell by 72% to 3,109 units (vehicles and tractors combined) as compared to 10,923 units in Q1 FY20
The agriculture equipment segment’s revenue was Rs 4,906.92 crore as against Rs 6,077.9 crore in the same quarter last fiscal

Revenue from financial services stood at Rs 3,031.69 crore as compared to Rs 2,822.03 crore in first quarter last year

Hospitality segment recorded a revenue of Rs 294.26 crore as compared to Rs 612.49 crore in the same period a year ago
Indian auto industry (excluding two-wheelers) reported a de-growth of 81.5% over the previous year.

Against overall auto industry’s 36% YoY fall in July retail volumes, tractor segment volumes rose 35%. M&M, as market leader with dominant 41.2% domestic market share as of FY20, is also benefitting from present sector tailwinds.

Rural income levels stay on a relatively firmer footing with cash flows healthy on the back of strong Rabi harvest, rise in crop MSPs, healthy water table levels. Moreover, amid ongoing normal monsoon progress (1% above LPA as of July 31), strong Kharif sowing, outlook remains bright for rest of FY21

Tightening of capital allocation remains a key focus area. The management has reiterated that it has stopped incremental investments in Ssangyong and has cancelled investment plans in the loss-making entity, Mahindra Automotive NA

The tractor segment is expected to register positive growth in FY21, led by better customer sentiments amid better prospects for Rabi crop, reduction in losses at international farm segment subsidiaries (Turkey and US entities), owing to better scale and cost reduction efforts, continued focus on better capital allocation and efficiency by halting incremental investments in Ssangyong, cancellation of USD500mn investment plans in loss-making Mahindra Automotive NA, and plans of stake sale in the electric vehicle division.

Further divestments and closures of loss making international entities will be announced by Mar21

India’s largest sports utility vehicle (SUV) maker Mahindra & Mahindra (M&M) reported 94% decline in its consolidated profit at Rs 54.64 crore for June quarter 2020, adversely impacted by the coronavirus pandemic. It had posted a profit after tax of Rs 894.11 crore in the same period last fiscal

Revenue from operations during the June quarter stood at Rs 16,321.34 crore as against ₹26,041.02 crore in the year-ago period, down 37%. The automotive segment posted a revenue of Rs 6,508.6 crore in the first quarter, down from Rs 13,547.84 crore in the same period a year ago

The number of vehicles sold crashed by 78% to 27,565 units in Q1 FY21. Tractor sales came down by 22% to 64,140 units from 82,013 units while exports fell by 72% to 3,109 units (vehicles and tractors combined) as compared to 10,923 units in Q1 FY20
The agriculture equipment segment’s revenue was Rs 4,906.92 crore as against Rs 6,077.9 crore in the same quarter last fiscal

Revenue from financial services stood at Rs 3,031.69 crore as compared to Rs 2,822.03 crore in first quarter last year

Hospitality segment recorded a revenue of Rs 294.26 crore as compared to Rs 612.49 crore in the same period a year ago
Indian auto industry (excluding two-wheelers) reported a de-growth of 81.5% over the previous year.

Against overall auto industry’s 36% YoY fall in July retail volumes, tractor segment volumes rose 35%. M&M, as market leader with dominant 41.2% domestic market share as of FY20, is also benefitting from present sector tailwinds.

Rural income levels stay on a relatively firmer footing with cash flows healthy on the back of strong Rabi harvest, rise in crop MSPs, healthy water table levels. Moreover, amid ongoing normal monsoon progress (1% above LPA as of July 31), strong Kharif sowing, outlook remains bright for rest of FY21

Tightening of capital allocation remains a key focus area. The management has reiterated that it has stopped incremental investments in Ssangyong and has cancelled investment plans in the loss-making entity, Mahindra Automotive NA

The tractor segment is expected to register positive growth in FY21, led by better customer sentiments amid better prospects for Rabi crop, reduction in losses at international farm segment subsidiaries (Turkey and US entities), owing to better scale and cost reduction efforts, continued focus on better capital allocation and efficiency by halting incremental investments in Ssangyong, cancellation of USD500mn investment plans in loss-making Mahindra Automotive NA, and plans of stake sale in the electric vehicle division.

Further divestment and closures of loss making international entities will be announced by Mar21

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