"MAJOR WARNING BELL- LOW PROFIT MARGIN AND PROFITS"
Crompton Greaves 2Q Net Down 45% On Weak Power Division Performance
NEW DELHI -(Dow Jones)- Crompton Greaves Ltd. (500093.BY) Wednesday posted a 45% drop in consolidated net profit for the second quarter, as earnings from its key power systems division halved.
Profit for the July-September period slumped to INR1.17 billion from INR2.14 billion a year earlier, the engineering company said.
This is the second consecutive quarter when Crompton has shown a steep fall in net profit.
The company's shares plunged after the results to close 12.2% lower at INR143.90 in a Mumbai market that ended 2.1% higher.
Consolidated sales rose 13% to INR27.06 billion from INR23.98 billion.
Profit from the power systems division decreased to INR934.3 million from INR1.93 billion. Profit from the consumer products and industrial systems divisions also fell from the year-earlier levels.
"The profit margins have taken a big hit because of the poor performance from its power segment and a sharp increase in input costs," said an analyst at a Mumbai-based brokerage who didn't want to be named. "The power sector is likely to see problems going ahead due to the delays in the overall capital expenditure cycle, and we do not expect a quick recovery in the stock."
Crompton officials didn't immediately give any reason for the fall in profit. In an Aug. 1 interview with Dow Jones Newswires, Chief Financial Officer Madhav Acharya had said that second-quarter profit would likely remain muted as customers in domestic and key overseas markets were postponing projects due to uncertainty in the global and Indian economies.
In a statement Wednesday, Crompton said it received INR22.60 billion in new orders in the quarter ended Sept. 30, a sequential jump of 33%. It didn't give a year-on-year comparison.
"The sharp rise in order intake was on account of power business both in the domestic and in the international market," Crompton said.
- By Prasenjit Bhattacharya, Dow Jones Newswires; 91-11-4356-3358; prasenjit.bhattacharya@dowjones.com
--Raghavendra Upadhyaya in Mumbai contributed to the article.
(END) Dow Jones Newswires
October 19, 2011 07:01 ET (11:01 GMT)
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