Bajaj Auto Q4 net drops 2pc to Rs 1,526 cr as sales fall

Bajaj Auto on Wednesday reported a 2% drop in consolidated net profit to Rs 1,526 crore in the fourth quarter ended March 2022 as domestic and export sales were hit by weak demand and shortage of semiconductors.

The Pune-based company had reported a consolidated net profit of Rs 1,551 crore in the January-March 2020-21 quarter.

Total revenue from operations decreased to Rs 7,975 crore in the fourth quarter from Rs 8,596 crore in the same period of FY21.

The company’s total two-wheeler and utility vehicle sales fell 17% to 9,76,651 units in the fourth quarter from 11,69,664 units in the same period of fiscal 2020-21 .

In the domestic market, total sales were down 27% to 3,89,155 units from 5,34,119 units in the same period of FY21. Its overseas shipments were also down 8% to set at 5,87,496 units during the reporting period, compared to 6,35,545 units during the January-March 2020-21 period.

Bajaj Auto said it faced serious supply chain issues, especially in the fourth quarter of FY22, affecting sales of motorcycles and commercial vehicles.

Speaking to media on an earnings call, Bajaj Auto chief executive Rakesh Sharma said there was a structural problem with domestic demand for two and three-wheelers as “the economic recovery n is not evenly distributed across all income groups”.

The continued decline in sales seen by the two-wheeler industry indicates that this category of consumers has been significantly impacted by COVID-19 and has not recovered, he said, adding that the segment of two-wheelers had begun to decline even before the pandemic hit.

Sharma said high inflation and rising gasoline prices are having a negative impact on demand as it leads to consumer pessimism.

Commenting on the impact of the semiconductor shortage, he said that in the fourth quarter, planned production was hit by around 10-15%, with April being the worst month.

Going forward, he said in the first quarter of FY23, there could be a 15-20% impact, as the company expects “disruption due to an outage in the supply chain.” ‘supply’ in April and May.

He, however, said that Bajaj Auto works closely with international suppliers and even develops new suppliers, which however takes time in product validation.

Sales of the company’s Chetak electric scooter have also been affected by the shortage of semiconductors, Sharma said, adding that the model has so far racked up backorders of around 15,000 units.

When asked if incidents of electric two-wheeler fires would hinder the adoption of the technology, Sharma said no, saying that if customers will become a little more cautious, they will gravitate towards brands more reliable.

In addition, the rate of transition from internal combustion engine (ICE) vehicles to electric vehicles will be determined by the total cost of ownership (TCO), he said, adding that currently both -ICE and EV wheels have a similar TCO as battery prices haven’t come down as expected earlier.

In the 2021-22 financial year, Bajaj Auto said its consolidated net profit rose to Rs 6,166 crore, up 27% from Rs 4,857 crore in 2020-21.

Total revenue from operations reached Rs 33,145 crore in the last financial year compared to Rs 27,741 crore in 2020-21.

Bajaj Auto recorded an 8% increase in total sales last fiscal year to 4,308,433 units from 3,972,914 units in 2020-21. The company said its international business recorded the highest sales ever with more than 25 lakh vehicles in FY22. “With sales of more than $2 billion, exports now contribute more than 52 % of our net sales,” he added.

The company said its board had recommended a dividend of Rs 140 per share of Rs 10 each (1,400 percent) subject to shareholder approval.

The total dividend payout would amount to Rs 4,051 crore, the company said.

As of March 31, 2022, the Company’s excess cash and cash equivalents stood at Rs 19,090 crore compared to Rs 17,689 crore as of March 31, 2021, after a dividend payment of Rs 4,051 crore.

Shares in the company rose 0.40% to settle at 3,905.95 rupees on BSE.

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

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