Strong growth in overseas markets and divestment of its stake in China joint venture saw a positive jump in Bharat Forge’s third quarter profit numbers.
The company’s net profit for the quarter ended December 31, 2013 zoomed up by 97.9 per cent at Rs 94 crore from Rs 47.5 crore in the corresponding quarter last fiscal. On a sequential basis (compared to second quarter) PAT was down 2.5 per cent.
Revenue for the quarter at Rs 832.1 crore was up 23.7 per cent from Rs 672.6 crore in the same quarter last year. On quarter-on-quarter basis revenue were down1.5 per cent.
“BFL continues to do well despite the domestic slowdown because of a diversified product mix and strategic entry in to the non-automotive sectors in 2008. We continue to win new orders across auto & non-auto segments. In the quarter gone by, sales developed in line with expectations while it witnessed a strong improvement over the weak third quarter previous year. The International operations have also registered strong performance driven by cost controls, productivity improvements and innovative new products,” said B.N. Kalyani, Chairman & Managing Director.
BFL Q3 shipment tonnage at 42,702 tons was flat compared to the previous quarter while it increased by about 14 per cent compared to Q3 FY13 despite the domestic CV market witnessing the worst quarter in the last two years. EBITDA for Q3 grew by 54.7 per cent to Rs 214.5 crore compared to Q3 FY13. EBITDA margins expanded by 520 bps on back of improvement in turnover.
The slowdown in the auto manufacturing segment was evident on the company’s numbers. The Commercial vehicle sector continues to register frail performance in the backdrop of strong headwinds and pessimistic sentiments, said the company.
Stalled infrastructure projects and lack of industrial activity have led to low M&HCV production volumes at all major OEM’s. M&HCV segment declined 21.5 per cent and 34.8 per cent on a QoQ and YoY basis respectively registering volume previously witnessed during the 20009 Global Financial Crisis.
“Looking ahead, we expect to see demand levels across geographies stabilizing with an upward bias. Overall demand is expected to be moderately better in Q4 FY14 driven by exports & early signs of recovery in India,” said Kalyani.
The company also announced divestment of its investment in China JV. The divestment will have a positive impact on BFL cash flows and profitability on a consolidated basis. Bharat Forge, through its indirect subsidiary in Hong Kong has divested its 51.85 per cent stake in its Chinese JV operations (FAW Bharat Forge (Changchun) Company Limited) to its Joint Venture partner, China FAW Corporation Limited, for $ 28.20 million (around Rs 175 crore) ending its eight year old Joint Venture in China.
BFL, since inception of joint venture in 2006, had over a period of time invested Rs 178 crore in 4 tranches.
