1. Huge discounts hit HeroMotor Corp Q4, net profit skids 14% to Rs 718 cr

Huge discounts hit HeroMotor Corp Q4, net profit skids 14% to Rs 718 cr

The after-effects of demonetisation and huge discounts to liquidate its stock of BS-III vehicles by March 31 saw the country’s largest two-wheeler manufacturer, Hero MotoCorp, missing analysts’ estimates to post a net profit of Rs 717.8 crore, down 14% year-on-year (YoY), during the January-March quarter.

By: | New Delhi | Updated: May 11, 2017 6:16 AM
Going forward, the company said it aims to consolidate its leadership position without compromising on margin and revenue. (Reuters)

The after-effects of demonetisation and huge discounts to liquidate its stock of BS-III vehicles by March 31 saw the country’s largest two-wheeler manufacturer, Hero MotoCorp, missing analysts’ estimates to post a net profit of Rs 717.8 crore, down 14% year-on-year (YoY), during the January-March quarter. Net sales during the period declined 8% to Rs 6,915 crore, which was on account of weak demand for motorcycles in the rural market.

The company pegged the revenue impact due to discount on sale of BS-III vehicles at Rs 193.28 crore. Earnings before interest, taxes, depreciation and amortisation (Ebitda) was down 19% at Rs 958 crore. The margin was down at 13% against 15% during the same period last year. The company said that liquidation of BS-III stocks at the end of March resulted in a one-time impact on the margin.

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The quarter saw two-wheeler sales fall 5.8% at 16.21 lakh units against 17.21 lakh units. Hero has outlined its capex plan of around Rs 2,500 crore up to FY19, which would see product development, phase-wise capacity expansion in Gujarat and upcoming plants in Andhra Pradesh and Bangladesh, along with digitisation. The investments also include upgradation and modernisation of plant machinery. During the current fiscal, it plans to launch half a dozen products and said that it had raised prices on some of the models by Rs 500-2,200 from May 1.

Going forward, the company said it aims to consolidate its leadership position without compromising on margin and revenue. “In the 2016-17 fiscal, we made some key inroads into global markets, including the launch in Argentina and Nigeria. Our new manufacturing facility in Bangladesh will also commence operations in FY2017-18,” said Hero MotoCorp chairman & managing director and CEO, Pawan Munjal, in a statement. The company’s board has recommended a final dividend `30 per equity share for FY17.

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