Royal Enfield's Parent Company Eicher Motors Reports 14% Decline In Net Profit

Eicher Motors Limited (EML), the parent company of Royal Enfield has announced net profit of Rs. 456 crore for the third quarter of the current financial year, a decline of 14 per cent, compared to Rs. 533 crore it reported a year ago. For the quarter ended December 31, 2021, Eicher Motors Ltd recorded total revenues of Rs. 2,881 crore, up by 1.9 per cent as compared to Rs. 2,828 crore in the corresponding quarter of FY 2020-21, the company said in a statement. EBITDA was at Rs. 582 crores as compared to Rs. 672 crores in the same quarter of the previous financial year.

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In the quarter under review (October to December, 2021), Royal Enfield sold 1,67,664 motorcycles, a decline of 15.6 per cent from 1,98,557 motorcycles sold over the same period in FY 2020-21. However, Royal Enfield continued its strong growth momentum in international markets with total exports at 17,036 units, more than 57 per cent increase over 10,833 units in the same period last year.

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According to the company, the ongoing global shortage of semiconductor chips and the onset of the third wave of COVID-19 with the Omicron variant, impacted the quarter results. However, Eicher Motors recorded considerable sequential improvement as compared to Q2 FY 2022 with a 28 per cent growth of revenues (over Rs. 2,250 crore) and a 35.3 per cent sequential growth of EBITDA (earnings before interest, taxes, depreciation and amortization) of over Rs. 430 crore, the company added.

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Siddhartha Lal, Managing Director of Eicher Motors Limited, says the company is working on creating an alternative vendor ecosystem to mitigate the impact of the semiconductor shortage.

Commenting on Eicher Motors' performance, Siddhartha Lal, Managing Director of Eicher Motors Ltd, said, "Continuing global shortage of semiconductor chips and the onset of the third wave of the COVID-19 pandemic, posed a challenge to the industry at large during the third quarter. We are working towards creating an alternative vendor ecosystem to mitigate the impact of the shortage on the supply front. Our performance continues to remain resilient despite challenges. Our international performance has been strong, and the introduction of the all-new Classic 350 drove significant consumer interest in India and in global markets. This is reflected in our financial performance with sequential growth in EBITDA margin of 1.1% quarter-on-quarter (adjusted for one-off). At VECV, we made good progress across all segments backed by our focused and granular approach. We achieved encouraging growth despite supply chain challenges. Our consistent efforts towards aligning the next stage of our growth with a renewed ESG vision saw Dow Jones position Eicher Motors Limited as one among only ten global automotive companies to feature on its elite list of Dow Jones Sustainability Indices 2021 (DJSI) in the Emerging Markets category."

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The Royal Enfield Classic 350 is the brand's highest-selling model for over a decade now.

B. Govindarajan, Executive Director, Royal Enfield said, "Our growth momentum at Royal Enfield continues to remain stable, highlighted by persistent good performance in the international markets. Performance across Europe and Americas has consistently registered growing trends, and we continue to deepen presence and engagement in these markets. During the quarter, we furthered our commitment to the Asia-Pacific region with the commencement of operations at our CKD facility in Thailand. This facility will enable us to efficiently cater to the growing demand in the region, and also become the hub for the rest of Southeast Asia.

"The all-new Classic 350, since its debut in India, has been launched in APAC markets as well as made its debut in Europe at EICMA 2021. We've already manufactured and rolled out more than 1,00,000 units of the new Classic 350. This reiterates consumers' continuing love for the timeless style and design of the Classic. Our thrust on the non-motorcycling business also continues to show strong results, with the division registering a 29% year-on-year growth. We have robust plans for both apparel and accessories business and will continue to enable options for self-expression and personalisation for our consumers. Moving forward, we are optimistic that supply chain constraints will gradually ease out over the next two quarters and production to stabilise over time."

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The unique, rich black-chrome tank colour scheme, has been developed in-house, with Royal Enfield's industry-leading chroming technology at the company's original 1950's manufacturing factory in Thiruvottiyur, Chennai - India. Only 480 units of the 120 years anniversary models of the Interceptor 650 and Continental GT 650 have been offered on sale globally.

As Royal Enfield completed its 120 years anniversary in 2021, the company showcased this legacy and heritage at EICMA 2021, the annual global motorcycle show at Milan, Italy. The company unveiled the Royal Enfield SG650 Concept motorcycle at this year's EICMA show. Royal Enfield also introduced the 120th Year Anniversary Edition of the brand's flagship 650 Twin motorcycles, the Interceptor 650 and the Continental GT 650 at EICMA 2021. The two premium, special edition motorcycles with a limited production run of only 480 units globally, were distributed as 120 units each for India, Europe, Americas and South-East Asia.

Royal Enfield is working on several new models, including the scrambler-styled 411 cc Royal Enfield Scram, which is expected to be launched very soon. Also in the works are new models in the 650 Twin platform, with development of the Royal Enfield Super Meteor 650, and the Royal Enfield Shotgun 650 proceeding at a brisk pace.