Hero MotoCorp Q3 results: Net profit slips 37%, revenue down to Rs 7,883 crore

Hero MotoCorp reported a standalone net profit of Rs 686 crore in Q3 FY22, down 36.7% from Rs 1,084 crore in the year-ago period. Sequentially, the net profit had declined 13.6% from Rs 794 crore. The profit before tax (PAT) stood at Rs 911 crore.

The world’s largest two-wheeler manufacturer has reported a standalone revenue of Rs 7,883 crore, declining 19.4% from Rs 9,776 crore in the corresponding quarter of the previous year. As compared to the September 2021 quarter, revenue has dropped 6.7% from Rs 8,453 crore.

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At the operating level, earnings before interest tax, depreciation and amortization (EBITDA) fell 33% to Rs 959.5 crore in the December quarter as compared to Rs 1,413.7 crore in the same quarter of the previous year. Sequentially, the EBITDA is down by 10% from Rs 1,066 crore during the previous quarter.

EBITDA margin came in at 12.2% in Q3 FY22 from 14.5% in the year-ago period.

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In Q3 FY22, Hero Motocorp sold 12.92 lakh motorcycles and scooters, a 30% decline from 18.45 lakh sold in the same period of the previous year. Sequentially, the volume declined by 10% from 14.38 lakh. The global business sold 61,000 units in the reported quarter, which is a growth of 16% year on year.

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“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,” said Niranjan Gupta, chief financial officer, Hero MotoCorp.

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Despite the sharp rise in commodity prices, the company was able to save on costs due to various initiatives. The cost of raw material stood at 70% of the sales, which is 110 bps lower year on year and 150 bps lower than the previous quarter.

The company saw a marginal increase in its employee costs at 6.6% of total sales, up 130 bps as compared to 5.3% in the corresponding quarter (Q3 FY21). On a sequential basis, it increased 60 basis points from 6.0% in the previous quarter.

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Other expenses increased to 10.3%, a 50 bps rise YoY and 120 bps rise QoQ.

For the financial year 2021-22, the company has declared an interim dividend of Rs 60 per equity share (face value of Rs 2 each) amounting to 3000%.

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In Friday’s early trade, shares of Hero MotoCorp lost around 3% as the quarterly earning disappointed the investors. The stock fell to a low of Rs 2,655 as against the previous close of Rs 2,734 on the NSE.

On February 11, Hero MotoCorp closed 17.05 points or 0.62% lower at Rs 2,717.05 at National Stock Exchange.