Hero Honda net profit zooms 44%

Hero Honda Motors Ltd (HHML), the world’s largest two-wheeler manufacturer, today reported an impressive bottom line growth to match its robust top line performance during the first quarter (April-June) of the financial year (FY) 2008-09.  

Hero Honda reported  44  per cent growth in profit after tax (PAT) at Rs 272.87  crore for the first quarter of this financial year. Hero Honda’s profit after tax in the corresponding period last fiscal (April-June, 2007-08) stood at Rs 189.84 crore.

Total turnover (sales turnover plus other income, net of excise) grew to Rs. 2890.25 crore, a growth of 16 per cent over Rs 2486.90 crore recorded in the corresponding period last fiscal. The company has recorded an EBIDTA margin of 11.99  per cent in the quarter. The EBIDTA margin in the previous quarter (Jan-March ’07-08) was 14.77 per cent.  

This strong financial performance comes close on the heels of the company’s good overall sales through the first quarter. Hero Honda kicked off the new financial year with a 9 per cent growth in sales in the month of April, and followed up with 9.5 per cent growth in May and 16 per cent in June. Indeed, Hero Honda’s share in domestic motorcycle market has been growing upward of 55 per cent. 

Hero Honda’s cumulative sales for the first quarter (Q1) this FY stands at 8,94,244 units - a growth of  11 per cent over Q1 last FY (2007-08). Hero Honda had sold 8,02,853 units of two-wheelers in Q1 in the last FY.  

The consistent performance comes on account of key Hero Honda brands driving strong volumes across segments – CD Deluxe in entry segment, Glamour, the New Splendor NXG, Splendor + and Passion Plus in deluxe segment and Hunk, CBZ X-treme and Karizma in the premium segment. Hero Honda’s scooter Pleasure has also been contributing to the volumes, with more than 10,000 units being sold in June this year.

According to Dr. Brijmohan Lall, Chairman, Hero Honda Motors Ltd, “This financial year is the 25th year of Hero Honda’s existence. We had a befitting beginning to the year with the inauguration of our new plant at Haridwar in April, which is going to substantially augment our installed capacity. This is a significant step towards our future growth. We remain committed to reach out to our customers across the country, and provide them with quality products. I also wish to thank our customers and all our stakeholders for reposing their faith in us, which is consistently reflected in our top line as well as our bottom line growth.”   

Mr. Pawan Munjal, MD & CEO, Hero Honda Motors Ltd., said “We continue to demonstrate leadership performance - profitability in tandem with increasing market share. We have continued to invest in further spreading our distribution network, expanding into new markets in semi-urban, rural and upcountry areas; and in brand building initiatives through our customer focused advertising and leveraging our various properties such as cricket etc – resulting in strong top line growth. Simultaneously, we have continued to focus on all-round efficiency improvement and cost rationalization across the board. This two-pronged strategy has helped us maintain profitability, even as we continue to further consolidate our near 55 per cent share in the domestic motorcycle market.”

The industry, however, is severely impacted with the very high costs of raw materials such as steel, aluminum, copper and rubber; double-digit inflation and the continuing uncertainty over interest rates.

“Even amidst the current industry scenario, our strategy has succeeded in delivering growth and profitability. We will continue to follow our winning strategy to keep up the better-than-industry performance,” Mr. Munjal added. 

Sourced From: Corporate Voice|Weber Shandwick