Motherson Sumi Q4 profit hit by poor sales

Automobile components major Motherson Sumi Systems (MSSL) reported a 68.4% decline in consolidated net profit to Rs 135.66 crore for the fourth quarter ended March 31, mainly affected by the coronavirus pandemic.

The company had posted a consolidated net profit of Rs 429.31 crore in the corresponding period of the previous financial year.

Total revenue from operations in the fourth quarter stood at Rs 15,159.05 crore as against Rs 17,169.47 a year ago.

For the financial year 2019-20, MSSL’s consolidated net profit stood at Rs 1,294.44 crore. It was Rs 2,098.13 crore in 2018-19.

Total consolidated revenue from operations in 2019-20 was Rs 63,536.87 crore. It was at Rs 63,522.88 crore in 2018-19.

The overall performance was affected by OEMs’ (original equipment manufacturers) plant closures due to the coronavirus pandemic, especially in China and in parts of Europe.

The company remains optimistic owing to large greenfield projects have started to contribute positively to its revenues. It is currently focused on finding solutions to the challenges faced in Tuscaloosa operations in close coordination with the customers.
The company delivered significant margin expansion in its global mirrors and polymers businesses and has reduced debt by Rs 1,100 crore via strong control of working capital and investments.

The company expects a tougher Q2 of CY2020 due to production shutdowns globally and sees an overall improvement sequentially after Q2.

The company has robust order book of Rs. 107,122 crs (Euro 13.6 billion) at SMRP BV level, new orders worth Rs 43,321 crs (Euro 5.5 billion) bagged during the year, while orders worth Rs 79,554 crs(Euro 10.1 billion) went into execution.

However gross debt continues to be quite high at Rs 11668 crs as on FY20 from Rs 10942 crs last year. MSSL is confident of clocking healthy FCF in coming years since it has completed growth capex and has firm customer orders in hand. Future capex requirements would be tied to product launches of customers

Also the managerment has stated that post the Covid19 outbreak, this prevented it from closing certain acqusitions. However, the same now present greater valuation comfort. MSSL, upon specific client requests, is further looking at troubled companies that can be acquired at relatively low valuations now ahead.

MSSL has also stated that it would be disclosing details of its new five-year plan in October 2020 this year which will investors a better perspective of its long term vision and mission for the next year ahead.

Disclaimer –
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.