NEW DELHI : Hero MotoCorp Ltd on Tuesday reported a 15% drop in fiscal-fourth quarter profit because of coronavirus-related disruptions.
Net profit fell to ₹620.71 crore for the quarter ended 31 March from ₹730.32 crore in the year earlier, the company said. The company witnessed a significant decline in retail sales in March, due to the covid -19-led lockdown. It also had to cut production during April-May due to supply disruptions from Chinese parts manufacturers.
Net sales during the period fell by 21% from a year earlier to ₹6,238.39 crore as a consequence of the 25.7% decrease in vehicle sales during the quarter to 132,300 units.
However, an overall drop in expenses and taxes paid in the quarter, helped the company beat Bloomberg’s consensus earnings estimate of ₹569.20 crore. Its operating profit, or the earnings before interest, tax, depreciation and amortization (Ebitda), declined by 38.3% to ₹659.88 crore from ₹1,069.32 crore in the year-ago. The operating margin also contracted by 299 basis points to 10.57% from 13.56% in the year-ago period.
The New Delhi-based company absorbed significant losses due to the unsold stock of BS IV vehicles at dealerships during the lockdown. Hero, also decided to compensate all its dealers who had significant stocks and bought back the inventory of dealers in the National Capital Region.
According to Pawan Munjal, chairman and managing director, Hero MotoCorp, while the covid-19 pandemic has pushed several timelines, Hero has successfully navigated through the unprecedented times with business continuity. Now the company will try to rapidly scale-up operations, and hopes that the industry will receive support from all quarters.
“FY20 was a challenging year for the auto industry globally, and yet we at Hero MotoCorp had some positive takeaways. Be it strengthening our presence in the premium motorcycle and scooter segments or swiftly transforming to BS-VI emission norms, our teams ensured we continue to strengthen the brand in a sluggish market," added Munjal.
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