Maruti Suzuki India Ltd. on Oct. 24 posted a 39.4% year over year drop in profit for the second quarter of fiscal 2020 but still exceeded analysts' expectations for the period.
For the three months to Sept. 30, the Indian unit of Suzuki Motor Corp. said after-tax profit dropped to 13.59 billion rupees from 22.40 billion rupees a year ago. The company attributed the drop to a significant decline in sales primarily due to an increase in the cost of owning a car.
The company said the implementation of stringent emissions norms, the rise in vehicle insurance expenses, higher taxes, and lower availability of finance and increased down payment requirements have made owning a car costlier.
Revenue from operations totaled 169.85 billion rupees, versus 224.33 billion rupees in the second quarter of 2019. Net sales declined 25.2% year over year to 161.20 billion rupees from 215.52 billion rupees, while sales volume dropped 30.2% to 338,317 vehicles.
Besides sales, the carmaker said higher sales promotion and depreciation expenses during the quarter also contributed to a drop in profits.
Diluted EPS came in at 44.97 Indian rupees, down from 74.17 rupees in the year-ago period but above the S&P Global Market Intelligence mean consensus normalized EPS estimate of 34.60 rupees.
Meanwhile, total comprehensive income declined to 12.55 billion rupees from 22.07 billion rupees in the year-ago period.
Shares of Maruti Suzuki were down 0.68% at 7,390 rupees each following the announcement.
As of Oct. 23, US$1 was equivalent to 70.76 Indian rupees.