India’s Motherson Sumi Wiring reports Q1 profit below estimates on higher expansion costs

Motherson Sumi Wiring India reported quarterly profit below estimates on Monday due to higher expansion costs.

The company’s net profit fell nearly 4% to 1.43 billion rupees ($16.51 million) in the three months ended June, from 1.49 billion rupees a year ago.

It came in below analysts’ estimates of 1.53 billion rupees, according to data compiled by LSEG.

The company, which sells wiring harness solutions to carmakers including Maruti Suzuki and Tata Motors, reported a 14% rise in revenue from operations to 24.95 billion rupees.

Overall expenses rose nearly 16%, outpacing revenue growth.

Key context

Motherson Sumi Wiring has been expanding production capacity with three greenfield projects that would support wiring demand for both electric and gas-powered vehicles. Two of three plants have not yet ramped up production, the company has said.

Associated costs have led to a decline in profit in the last two quarters.

In the reported quarter, the company booked 260 million rupees in start-up costs, compared to 130 million rupees last year.