Eicher Motors Q1 Results: Profit Falls On Lower Demand

Eicher Motors Ltd.’s quarterly profit fell by more than half as local lockdowns to curb the severe second Covid-19 wave shut dealerships and stalled production. Still, the earnings met estimates.

Net profit of the maker of Royal Enfield motorcycles declined 55% sequentially to Rs 237 crore in the three months ended June, according to its exchange filing. That compares with the Rs 233-crore consensus estimate of analysts tracked by Bloomberg.

Highlights (QoQ)

• Revenue fell 33% to Rs 1,974.3 crore, compared with the Rs 1,833.6-crore forecast.

• Operating profit dropped 43% to Rs 363 crore.

• Operating margin contracted to 18.4% from 21.6%.

Eicher Motors’ sales dropped 40% over the preceding quarter at 1.24 lakh units in the April-June period. Its commercial vehicle unit, Volvo Eicher Commercial Vehicle, too, saw sales tumble 68% to 5,806 units.

“With the second wave of the pandemic sweeping across the country and making its impact felt through the economic cycle, the previous quarter presented a challenging environment for the automotive sector overall,” Siddhartha Lal, managing director of Eicher Motors, said a statement.

The global shortage of semiconductors, Lal said, continues to be a concern, and is likely to hamper production in the ongoing quarter, and possibly through the rest of the year as well.

Yet, Royal Enfield said it reported the best ever quarterly performance in international markets on the back of strong performance in Americas.

Other Highlights

• Announced commencement of local assembly of motorcycle in Colombia, the third-biggest motorcycle market of Latin America, in partnership with its local distributor.

• Royal Enfield expanded its presence in international markets and commenced operations in Singapore and the Netherlands with the launch of standalone, flagship stores.

Vinod Dasari Quits

Vinod K Dasari has stepped down as the chief executive officer of Royal Enfield to pursue his personal passion and ambition in "affordable healthcare", the filing said.

B Govindarajan, chief operating officer at Royal Enfield since 2013, will take on the responsibility of leading the two-wheeler brand effective Aug. 18. He will be inducted as a whole-time director on the board of Eicher Motors, and will take on as executive director-Royal Enfield, the company said.

Commercial Vehicle Business

Vinod Aggarwal, MD and CEO of VE Commercial Vehicles, said the last quarter has been very challenging for the CV industry. "With lockdowns and cautious approach by financiers, retail of vehicles was severely impacted," he said.

He, however, expects the CV industry to bounce back as customers start to replace old trucks and buses with modern fuel-efficient and highly productive vehicles.

Shares of Eicher Motors closed 3.95% lower before the results were announced compared with a 0.5% gain in the benchmark Nifty 50.