Amtek Auto Disappoints in Q4FY13

Amtek Auto announced its Q4FY13 earnings post market hours on May 13, 2013. The result was largely disappointing. The company saw a decline in revenues and at the same time witnessed shrinking of its margins.

In Q4FY13, the revenues of Amtek Auto declined by 5.17% to Rs 599.46 crore. Its operating profit declined by 7.62% to Rs 130.78 crore. This translates into a decline in its operating margin to the extent of 57 basis points, when compared to Q4FY12.

However, Amtek Auto’s net profit increased by 272.04% to Rs 244.99 crore. But this was solely due to profits from extraordinary items (net of tax) of Rs 192.16 crore. If this was to be discounted, the net profit of Amtek Auto would have declined by 19.77% to Rs 52.83 crore.

During the quarter, Amtek Auto entered into an agreement to acquire the Germany-based Neumayer Tekfor Group. The company is engaged in the business of forging and integrated machining, has 9 manufacturing facilities globally and generates approximately 500 million euros in revenues.

Amtek Auto also divested 56% of the total paid-up capital in Amtek Crankshafts (ACIL) and 56% of the total paid-up capital in Amtek Ring Gears (ARGL). Consequent to this selling, Amtek Auto now ceases to be the holding company of these entities. Post divestment, the holding of Amtek Auto in ACIL and ARGL is to the extent of 44% and 42.07% respectively.

The situation in the automobile industry has resulted in a subdued performance by auto ancillary companies. This has also reflected in the performance of Amtek Auto. However, with strategic partnerships and prospective improvement in the operational dynamics of the automobile industry, the long-term prospects of Amtek Auto look good. However, short-term pressures on the performance of Amtek Auto are expected to continue.