Hero MotoCorp Beats Estimates Despite Demonetisation Bump
Net profit falls 2.6 percent (YoY), but beats analyst estimates.
Two-wheeler manufacturer Hero MotoCorp Ltd. reported a 2.6 percent decline in profit for the third quarter, but surpassed street estimates.
Hero MotoCorp sold 14,73,211 vehicles during the quarter, declining 12.8 percent from the same quarter last year. The cash crunch in the country, following the government’s demonetisation move on November 8, did have an adverse impact on two-wheeler sales, specially in the rural areas.
The industry did witness some negative sentiments during the October-December Quarter, but with the agility shown by the government in bringing about a slew of measures to aid the citizens at large, the market scenario has now begun improving.Pawan Munjal, Chairman, MD and CEO, Hero MotoCorp
The company's net profit in the December ended quarter fell to Rs 772.1 crore from Rs 793.2 crore in the corresponding quarter of the previous year, it said in a stock exchange filing. The Bloomberg consensus of analyst estimates had pegged the profit figure at Rs 711 crore.
Revenue in the third quarter declined 11.8 percent to Rs 6,779.9 crore from Rs 7,686.3 crore in the same quarter last year.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) was down 4.5 percent to Rs 1,079.7 crore from Rs 1,130.8 crore year-on-year. The EBITDA margin expanded 120 basis points to 15.7 percent.
Demand Outlook
The company expects single digit topline growth in financial year 2017-18 and bulk of it may come in the second half, the management said in a conference call on Thursday.
The management attributed the weakness in the third quarter to demonetisation which had adversely impacted volumes especially in rural areas where the company makes nearly half of its revenues.
Sales in Nigeria have started contributing to the topline. Argentina is likely to start contributing to revenue from the next financial year. Mexico, however, may see some challenges owing to ongoing political tensions between the country and the U.S., the company added.