Hero Honda stalls rivals, races on with 53% profit

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Beating the industry trend of declining profits, the country’s largest two-wheeler manufacturer, Hero Honda Motors Ltd, on Thursday reported a steep hike of 53% in its net profit for the quarter ended March 2008, while profits for a year-on- year basis grew by almost 13% at Rs 967.88 crore. The company, which has been able to absorb spiralling input costs unlike its competitors, declared a dividend pay-out of 950%. Other industry firms like TVS Motors and Bajaj Auto are expected to report losses for the year.

Hero Honda sold over 33 lakh two-wheelers in FY09, raising its market share to 52%, while the industry withe sales plunge by almost 12%. However, analysts add that the volatile input costs are going to continue exerting pressure on operating margins, which was reiterated by Pawan Munjal, managing director, CEO, Hero Honda Motors Ltd. "For the industry as a whole, the steadily rising input costs remain an area of concern.

The price of steel is at an all-time high and the prices of other commodities are also on a rise. For more than a year, the industry has been reeling under very-high interest rates and a lack of consumer finance.

Going forward, we expect the government to address these issues for the industry to be able to make a turnaround," he added.