Hero MotoCorp ekes out Q3 profit growth despite commodity headwinds

Hero Moto Corp Ltd reported modest improvements in its top and bottom lines, with revenue rising by 5.9% and net profit up 4.3%.

The company able to keep costs under control, but a dip in non-operating income prevented the gains from trickling through to the bottom line.

Against an increase of 5.9% in net sales, costs increased by only 5.7%.

“It is important to mention that we significantly grew on all key performance parameters including Revenue, PAT and EBIDTA during the quarter, bucking the severe headwinds on the commodities front,” the company said.

The company reported net sales of 7,305 cr, total costs of Rs 6,287 cr, which gave it a pretax profit of Rs 1,128 cr against a pretax profit of 1,085 cr last year.

However, it must be kept in mind that much of the festival sales this year had slipped into the second quarter, while last year, much of it happened in the third quarter.

Despite this, total number of two-wheelers sold during October-December increased by 16% to 1.71 mln.

The company also had to deal with a different tax regime this year due to the introduction of the GST.

Net of the excise and GST, there was an underlying revenue growth of 14.8%, the company said.

Net profit for the quarter was Rs 805 cr.

The Company announced an interim dividend of Rs 55 per share, which will cost it Rs 1,322 cr.

“The third quarter of this fiscal (FY’18) was yet another significant period for us as we surpassed all the milestones that we set for ourselves,” said Pawan Munjal Chairman, Managing Director and Chief Executive Officer Hero Moto Corp Ltd.

“Most importantly, our strategic initiatives in the scooter segment – including the on-ground activation programmes – yielded the desired results by driving sales volumes, and enabled us to grow ahead of industry during the third quarter.

“With an enhanced focus on the premium segment and scooters, we are confident of carrying the growth momentum forward.”