M&M reports Rs 3,255 crore loss in Q4; FY20 profit dips 86% to Rs 740 crore

Auto major Mahindra & Mahindra has reported 86 per cent decline in net profit at Rs 740 crore for the financial year 2019-20, compared to Rs 5,401 crore a year earlier. The decline in revenue and profit was caused by lower industry volumes in both automotive and tractor segments, the transition to BS-VI and the abrupt lockdown due to the COVID situation, the company told the stock exchanges.

M&M's revenue for FY20 declined 15 per cent to Rs 44,866 crore versus Rs 52,848 crore in FY19. The company's operating profit also declined 23 per cent to Rs 5,402 crore for FY20 from Rs 7,011 crore a year earlier.

In the quarter ending March 2020, M&M's net loss stood at Rs 3,255 crore on account of impairment provision for certain long-term investments. In Q4FY19, the company had posted a net profit of Rs 969.2 crore. The revenue for the March quarter stood at Rs 9,005 crore, compared to Rs 13,808 crore in Q4FY19, a decline of 35 per cent. The EBITDA for the quarter stood at Rs 1,227.4 crore, a decline of 34.3 per cent, while EBITDA margin expanded by 10 bps to 13.6 per cent.

The company said its market share for tractors increased 1% and auto LCV less than 3.5-tonne share increased 1.2%, while auto PV share decreased by 0.8%. Mahindra is re-examining the business outlook of international subsidiaries, Ssangyong, in view of the current environment, to decide on future capital allocation, the company stated.

"Automotive industry performance for Q4FY20 was a reversal in trend compared with from Q3FY20, when some green shoots were seen in the economy and the consumer sentiment," the company said.

"The lockdowns to contain the spread of the coronavirus have curtailed both supply and demand, the company said. "Added to this, a combination of lower incomes and heightened uncertainty has added to the drag on consumer spending and business investment," it added. As restrictions ease, and the economy at large, adapts to operating and living in a post-COVID era, it is expected that there will be a gradual recovery in the second half of the fiscal, the company said.

Also read: Mahindra & Mahindra Q3 profit plunges 73% to Rs 380 crore on one-time loss