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India's Escorts Kubota posts lower profit as rising costs squeeze tractor margins

By Reuters News

Nov 2 (Reuters) - India's Escorts Kubota ESCO.NS reported a 21.4% fall in second-quarter profit on Monday, as rising commodity costs and an unfavourable product mix squeezed margins in its tractor business, outweighing strong construction equipment sales.

The tractor and construction equipment maker's consolidated net profit fell to 2.50 billion rupees ($26.36 million) in the quarter ended September 30 from 3.18 billion rupees a year earlier.

Here are the details:

  • Revenue from operations rose 16.2% to 32.43 billion rupees, while total expenses rose 21.2% year-on-year

  • Agricultural machinery revenue rose 10.2% to 26.96 billion rupees, but the segment's operating margin shrank to 7.8% from 12.8% a year earlier, hurt by commodity cost inflation and changes in product mix

  • Tractor sales edged up 0.4% to 34,017 units during the quarter, while September sales fell 16.7% as a patchy monsoon, lower kharif (summer-sown crop) sowing and a delayed festive season hurt demand

  • The company expects margins to improve gradually from the January-March quarter, assuming stable commodity prices, before returning closer to normal levels in fiscal 2028

  • Escorts Kubota raised tractor prices in August and will raise them again in November, citing input costs, inflation and geopolitical uncertainties

  • Shares fell as much as 6.4% to 2,411.80 rupees, hitting their lowest since late July 2023


($1 = 94.8550 Indian rupees)

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