The country’s largest two-wheeler maker Hero MotoCorp on Tuesday registered a nearly 22% decline in consolidated net profit to ₹613.81 crore for the fourth quarter ended March 31, 2020. The company had posted a net profit of ₹786.81 crore in the January-March 2019 quarter, and ₹905.13 crore in the October-December 2019 period.
Revenues from operations during the quarter under review stood at ₹6,334 crore as against ₹7,953.45 crore in the same quarter last year, down 25.5%
For the full year 2019-20, the profits were up at ₹3,659.41 crore as against ₹3,466.35 crore in the previous year, while revenue from operation was down 13.8% to ₹29,255 crore as against ₹33,972.23 crore.
“The FY’20 was a challenging year for the auto industry globally, and yet we at Hero MotoCorp had some positive takeaways from the year...While the COVID-19 pandemic has pushed several timelines, we have successfully navigated through the unprecedented times with business continuity. As we now rapidly scale-up operations post the lockdown, it will be critical that the industry receives support from all quarters,” Pawan Munjal, chairman & CEO, Hero MotoCorp, said.
He added that as businesses and governments continue to learn and adapt to this evolving situation, strategic measures are needed to rapidly boost the customer sentiment and bring vitality to the market through focused economic measures.
The company declared a final dividend of ₹25 per share which together with the interim dividend of ₹65 per share aggregates to ₹90 per share.
Niranjan Gupta, chief financial officer (CFO), Hero MotoCorp, said, “As we march towards rapid recovery from lockdown, we have taken several measures towards saving cost, improve productivity of spends, and conserve cash. We have rationalised capex spends for the financial year by half, doubled target for the Leap-II program, and launched an initiative to improve the productivity of our overheads.”
He added that all these initiatives, coupled with new launches and innovative digital solution for sales and marketing, will help the company to tackle the uncertainties caused by the pandemic. “We will continue to monitor our plans, and stay prepared dynamically to do course correction if and when required,” Mr. Gupta said.
Mitul Shah, Vice-President - Research at Reliance Securities, said that Hero MotoCorp delivered disappointing performance in 4QFY20 primarily on margins front, mainly due to COVID-led nationwide lockdown towards the end of the quarter. “We believe that social distancing and better placed rural economy would help two wheeler industry and Hero MotoCorp going forward. However near term pressure on business and company's profitability is inevitable in this pandemic situation. BS6 price hike and liquidity issue are additional challenges for the industry at the moment.”