Hero MotoCorp Net Profit Falls 36.7 Per Cent In Q3 FY 2022

Hero MotoCorp, India's largest two-wheeler manufacturer, has reported a 36.7 per cent decline in net profit for the October to December 2021 quarter. The company reported profit after tax (PAT) for the quarter at Rs. 686 crore, as against Rs. 1,084 crore in the same quarter of the last financial year. Hero MotoCorp attributes the lower profit due to the impact on sales due to low demand due to the pandemic, as well as rise in commodity prices. Revenues from operations are reported at Rs. 7,883 crore for the same period, while earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter has been reported at Rs. 960 crore.

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Low demand due to pandemic, and rise in commodity prices are attributed to the lower than expected net profit in Q3 FY 2022.

"The current fiscal has seen the domestic two-wheeler industry impacted by twin challenge of softer demand due to pandemic and margin squeeze due to sharp commodity cost inflation. Our continued focus on savings programs combined with judicious price increases have helped cushion the impact on customers as well as margins. With rapid easing of the third wave, and full re-opening of all the sectors of the economy in coming weeks, including the hospitality sector, education sector etc., we expect a much broader economic recovery and increase in consumer confidence," said Niranjan Gupta, Chief Financial Officer, Hero MotoCorp.

"The recently announced Union Budget, with its focus on growth through increased capital expenditure, as well as continued support to rural and MSME sector augurs well for FY '23 demand scenario in general and two-wheeler industry in particular. Commodity cost pressures are expected to ease, as supply imbalances get corrected gradually, some part of which is evident in the softening of precious metal and steel prices. We will continue to accelerate our savings program, premiumise within the brands, and take price increases where necessary."

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The company sold 12.92 lakh units of motorcycles and scooters in the quarter under review, out of which exports accounted for 61,000 units, registering a growth of 16 per cent in Hero's Global Business. Hero MotoCorp is getting ready to launch its first electric two-wheeler, which will be produced at the company's manufacturing facility in Chittoor, Andhra Pradesh. Through investments and partnerships with brands such as Ather Energy and Gogoro Inc., Hero MotoCorp is also focusing on building an EV ecosystem, from product to technology to sales and service, customer care, operations and innovation.