Hero’s Q2 net down 27%,blames market sentiments

Sales volumes down 13.67%; demand from rural markets low

Written by Press Trust Of India | New Delhi | Published: October 24, 2012 1:10:02 am

The country’s largest two-wheeler maker Hero MotoCorp today reported 27.01 per cent decline in net profit for the second quarter ended September 30 at Rs 440.58 crore as sales declined.

The company had posted a net profit of Rs 603.62 crore in the same quarter last fiscal.

Net income during the second quarter this fiscal stood at Rs 5,187.46 crore,down 10.96 per cent from Rs 5,826.15 crore in the corresponding period last year.

“The two-wheeler market in the country has been adversely impacted due to the overall market slowdown and prevailing sentiments since the beginning of this quarter,” Hero MotoCorp MD & CEO Pawan Munjal said.

Sensing the slowdown in the market,the company adjusted production plans in August and September and this has been reflected in the quarterly sales figures,he added.

Sales volume during the quarter stood at 13,32,805 units as against 15,44,315 units,down 13.67 per cent.

“The onset of the festive season has been encouraging,with the retail sales of over two lakhs in the Navratras,” Munjal said.

Later addressing a conference call with analysts,Hero MotoCorp senior VP (marketing & sales) Anil Dua said,“Demand in rural and small towns were far more impacted than the metros. Overall economic sentiment,high inflation and rising petrol prices impacted demand”. Besides,the uncertainty over a good monsoon,which in later part of the season was sufficient,also affected the rural sentiment,he added.

The rural areas contribute 46 per cent of the company’s total two-wheeler sales,he said. Exports during the quarter were also down due to uncertainty and regulatory issues in some markets,Dua said.

The changing of the dealerships in existing neighbouring markets to Hero showrooms from erstwhile Hero Honda outlets also took the toll in overseas shipments,he added.

Dua said,“Festival season is very important for us. During October 1-15,we were retailing about 9,500 units every day. It has now increased to 25,500-26,000 a day. If this trend continues,the outlook is good. For the full year,we will try achieve the industry estimate,which the SIAM has now lowered to 5-7 per cent growth for FY’13.”

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