Escorts Q4 profit drops 28% on lower sales; sees positive tailwinds for farm sector

Farm machinery and construction equipment major Escorts Ltd on Friday reported a significant 28% decline in consolidated net profit for the fourth quarter ended March 2022, as the company was hurt by lower sales.

The consolidated net profit for the last three months of the financial year 2021-22 came in at Rs 189.98 crore as against Rs 265.41 crore it had clocked in the same period last year. 

Escorts reported lower consolidated revenue for the fourth quarter at Rs 1,878.51 crore as against Rs 2,228.75 crore in the same quarter a year back. 

The company said its consolidated net profit for the financial year ended March 2022 came in at Rs 735.61 crore as against Rs 871.63 crore, down 15.6%. 

Other highlights

1) For the fourth quarter, tractor volumes were at 21,895 units, down 32.8% as against 32,588 units in the year-ago period.

2) Construction equipment sales in the fourth quarter were at 1,286 units, down 19.8% from 1,604 units earlier.

3) Revenue from operations for FY22 came in at Rs 7,238.43 crore as compared with Rs 7,014.42 crore in FY21.

4) The company’s board of directors recommended a final dividend of Rs 7 per share.

Management commentary

Escorts Chairman and Managing Director Nikhil Nanda said the farm sector is seeing some positive tailwinds.

“With the prediction of a normal monsoon and good news on crop prices and production, we hope this sector will continue to flourish,” he said, adding the construction and railway sectors have also shown signs of improvement.

With government spending focused on these sectors, the situation shall only improve from here, Nanda added.

However, he said, “Continued inflation is a big cause of worry, both in terms of suppressing potential demand as well as for ecosystem profitability.”