July 26, 2019 / 8:28 AM / 5 months ago

UPDATE 2-Maruti Suzuki India beats profit estimates on lower costs

* First-quarter profit down over 27%

* Profit beats estimates

* Expenses drop 6% from a year ago (Adds details on cost cuts, industry background)

By Chandini Monnappa

BENGALURU, July 26 (Reuters) - Maruti Suzuki India Ltd on Friday managed to beat market expectations for profit by keeping costs under check amid an industry-wide slowdown that has taken its toll on the sector.

The maker of the iconic Maruti 800 earned 14.36 billion rupees ($208.11 million) for the first quarter ended June 30, compared with 19.75 billion rupees a year earlier.

Analysts on an average had expected the carmaker to post a profit of 13.96 billion rupees, according to IBES data from Refinitiv.

The country’s biggest automaker by market capital sold 402,594 vehicles in the three months ended June 30, down nearly 18% from a year earlier.

India is witnessing a slowdown in its auto sector, hit by a credit squeeze, higher insurance costs and a pile-up of inventory, prompting automakers including Maruti Suzuki and Ashok Leyland Ltd to cut production.

A government push towards electric vehicles has also worried the traditional industry.

On Thursday, rival Tata Motors Ltd reported a bigger June-quarter loss of 36.98 billion rupees ($535.93 million), compared with a loss of 19.02 billion rupees a year earlier.

Maruti Suzuki, which said it would cut production on surging inventories in May, recorded a 20% drop in raw material costs, helping reduce its overall expenses by 6%.

The company, majority owned by Japan’s Suzuki Motor Corp , said in April it would phase out all diesel cars, starting April next year.

The automaker’s shares were up 1.9% in afternoon trade, compared with the broader Mumbai market that was up 0.2%.

$1 = 69.0033 Indian rupees Reporting by Chandini Monnappa in Bengaluru; Editing by Uttaresh.V, Sherry Jacob-Phillips and Shounak Dasgupta

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