Bharat Forge reports 81% decline in net profit for Q3 FY23; overseas performance remains sluggish

The Indian multi-national company involved in the forging and automotive components manufacturing, Bharat Forge's overseas business posted an EBITDA loss of INR 62 crore in the December quarter (Q3FY23) on new product issues related to the capacity increase of aluminium forging capacity in Germany and the United States. The EBITDA loss of overseas subsidiaries in the September quarter (Q2FY23) was INR 34.1 crore.

The management does anticipate that this new capacity will stabilise in FY24 and enjoy good margins at 75-80 per cent utilisation.

Bharat Forge said, "Overseas businesses continue their journey to profitability with a focus on improving capacity utilisation, cost optimisation, price increases and cost reimbursement for customers."

Due to rising expenses, the company's consolidated net profit in Q3FY23 decreased 81% year over year to INR 78.72 crore. At the same time (Q3FY22) and Q2FY23, it reported a profit of INR 422 crores and INR 142 crores, respectively.

However, to reach INR 3,353 crore, total income increased by 9 per cent quarterly and 40 per cent annually.

On a standalone basis, Bharat Forge reported solid results during Q3FY23. On the other hand, the company's subsidiaries performed below average, which dented the combined performance.

With tonnage increasing 2.6 per cent to 62,755 tonnes, the company's standalone revenue for the quarter was INR 1,952 crores, up 4.7 per cent from the previous quarter.

In Q3FY23, standalone EBITDA increased by 310 basis points QoQ to INR 535 crores with a margin of 27.4 per cent.  The reported standalone profit after tax increased by 7.8 per cent over the previous quarter to INR 289.1 crores.