Hero Honda Q3 shows encouraging growth

21 Jan 2009

1

Hero Honda has released robust growth figure for the third quarter of the financial year. Total turnover (Net sales & Other Operating income) for Q3 stands at Rs2881.27 crore reflecting year on year growth of 4.77 per cent, while net profit after tax is Rs300.42 crore showing growth of 9.24 per cent.

The increase in net profit is due to reduction in excise duty and the lower raw material prices. The reduction in excise duty saved almost 40 per cent (Rs277.75 crore) in the third quarter because it began to produce its bikes in the excise free zone of Haridwar.

The market has cheered the results inspite of fall in Sensex, the stock price was up 2 per cent. Hero Honda, which holds 56 per cent market share in the domestic motorcycle market, has shown impressive growth figures for reccesionary times. It has crossed the landmark retail sales of more than six lakh two-wheelers in a month in October. Retail sales during the quarter grew by 3.5 per cent compared to corresponding quarter in FY '07-08 and achieved growth of 11 per cent in two-wheelers despatch sales in the first nine months (April-December) this financial year.

Softening of commodity prices, cost rationalization across the board, strengthening of the premium product portfolio and a growing rural market have played key role in the company's performance.

Pawan Munjal, MD & CEO, Hero Honda Motors Ltd., said "Our third quarter results reflect Hero Honda's remarkable resilience in the current deteriorating business environment and also illustrate the benefits of the strategic initiatives that we have undertaken over the past couple of years. We have been able to deliver another solid quarter of strong earnings and improved operating margins."

"We are celebrating 25 years of consistent growth and business success, driven by innovation and operational excellence. Looking forward, we will remain focused on further strengthening our industry leadership, while continuing to improve efficiencies in our business. We will continue to innovate in all areas of our business - technologically-superior products, network expansion, brand building, manufacturing excellence and financial management," he added.

Financial comparison of Q3 results All figures in Rs crore
Hero Honda Bajaj Auto
No. of Two wheelers sold 857,806 417,111
Net sales/ Income from Operations 287,404 214,100
Profit from Operations before Other Income, Interest and Tax 36,953 33,500
Net Profit for the period 30,042 16,600
Basic and diluted earnings per share (Rs.) 15.04 11.40

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