Hero MotoCorp first quarter net profit grows by 10.2 percent

July 19th, 2012 - 7:04 pm ICT by IANS  

New Delhi, July 19 (IANS) Two-wheeler maker Hero MotoCorp Thursday reported a 10.2 percent rise in net profit for the first quarter of the current fiscal which stood at Rs.615.46 crore from Rs.557.89 crore recorded in the corresponding quarter of the 2011-12 financial year.

The company reported its best-ever turnover which included proceeds from net sales and other operating income at Rs.6,247.28 crore, an increase of 9.95 percent from Rs.5,681.73 crore recorded in the like period of last fiscal.

The firm’s EBIDTA (earnings before interest, tax, depreciation and amortisation) margin stood at 15 percent.

Sales during the quarter under review stood at 1,642,292 units. The sales according to the company were supported by two consecutive months of highest-ever sales of April and May when it sold 551,557 and 556,644 units respectively.

However, the company gave a pessimistic outlook for sales which it said will be determined by the monsoon.

“Going forward, a lot will depend on a good monsoon and the consequent harvest to get the buyers to exercise their decision to purchase and not postpone it. We have so far seen only a patchy monsoon, and this might reflect on retail sales in rural and upcountry markets in the coming months,” said Pawan Munjal, managing director and chief executive.

“Currency volatility is also a point of concern and the rupee depreciation is likely to impact our margins. However, we remain optimistic of coming back to double digit growth by leveraging our strong brand and the advantage of our wide network.”

The company in recent times has announced investment plans of over Rs.2,500 crore for setting up two new plants in Rajasthan and Gujarat. It also plans to expand capacity at existing factories and develop an integrated research and development (R&D;) centre in Rajasthan.

The expansion plan is envisaged to take the total installed capacity to more than nine million units in two years’ time which is in line with the stated objective of reaching 10 million units in the next five years.

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