SKF Net Down on Auto Sales Slowdown, Input Costs

Resource from: CBCC Likes:2937

Oct 23,2008

Bearings and seals maker SKF India Ltd on Wednesday reported a 14 percent fall in July-Sept profit, hurt by slowing demand from car and commercial vehicle makers and high raw material costs. "In the automotive sector we saw a fair amount of softness in the market, though our industrial sector grew strongly", Managing Director Rakesh Makhija told Reuters. The two segments contribute equally to its sales. "The input material costs, which is primarily steel for us, went up, which had an overall impact on our total operating profit." Though some clients raised product prices, it was not enough to offset the costs, Makhija said. "We are in talks with our customers for another round of price corrections." SKF counts auto and two-wheeler makers such as Maruti Suzuki (MRTI.BO: Quote, Profile, Research), Tata Motors (TAMO.BO: Quote, Profile, Research), Mahindra & Mahindra (MAHM.BO: Quote, Profile, Research) and Hero Honda (HROH.BO: Quote, Profile, Research) among its customers. While steel prices have softened globally, domestic prices were still high, he said. "Margins will continue to be under pressure, the automobile industry will continue to be a bit soft," he said.

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