Escorts Kubota reported a strong increase in full-year net profit for FY24, driven by a surge in construction equipment sales. Net profit jumped 64.8% YoY to Rs 1,049.5 crore, compared to Rs 636.6 crore in FY23. Operating revenue grew at a slower pace, rising 5% YoY to Rs 8,849.6 crore from Rs 8,429.7 crore the prior year.
The company’s construction equipment segment was a bright spot, with volumes surging 42.2% YoY to 6,548 units in FY24. This translated to a 45% YoY increase in segment revenue, reaching a record high of Rs 1,709.7 crore compared to Rs 1,179 crore in FY23. The improved performance led to a significant jump in EBIT margin for the segment, rising to 9.3% in FY24 from a mere 2.9% in FY23. This improvement is attributed to higher volumes, a favorable product mix, and effective price adjustments.
Escorts Kubota’s core agri-machinery business, including tractors, saw a decline in sales volume. However, the positive performance of the construction equipment segment helped to offset this weakness and deliver an overall positive earnings picture.
Looking at Q4FY24 results, the momentum in construction equipment continued. Sales volume climbed 17.5% YoY to 1,798 units, while segment revenue rose 23.8% YoY to Rs 476.6 crore compared to Rs 384.8 crore in Q4 FY23. The EBIT margin for the construction equipment segment in Q4FY24 was 10.7%, reflecting a 264-basis-point increase from 8.1% in the corresponding quarter of the previous year.
Escort Kubota stands as a diversified company with a presence in many segments. Their bread and butter is the agricultural machinery segment, where they churn out tractors – the workhorses of Indian farms. But they go beyond just the tractors, offering essential companion products like lubricants, engines, and generators to keep everything running smoothly. They also have a booming construction equipment segment, selling a range of essential equipment like cranes, loaders, vibratory rollers, and forklifts, among others.
