Hero Honda Q1 results disappoint
11 July 2006
Motorcycle
market leader Hero Honda has reported disappointing results
for the quarter ended 30th June 2006. The results are
below market expectations as operating margins were impacted
by rising costs. The company has been steadily losing
market share to its closest competitor, Bajaj Auto, for
the last couple of years.
Net profits for the quarter increased 16.28 per cent to Rs237.74 crore from Rs204.45 crore for the same quarter of previous year. Net sales increased by 19.59 per cent to Rs2,364.37 crore. Total revenues went up by 20.37 per cent to Rs2,416.65 crore from Rs2,007.63 crore.
Operating profits for the quarter were higher by 9.13 per cent but operating margins as a percentage of net sales declined to 13.49 per cent from 14.78 per cent for the previous year quarter.
Input costs increased 21.26 per cent during the quarter while staff costs were higher by 22.28 per cent. Other operating expenses increased by 22.1 per cent. Depreciation charges were higher by 29.06 per cent.
The company managed to protect its bottom line mostly through a 71.01 per cent jump in other income for the quarter.
Hero Honda had reported a net profit of Rs267.19 crore on total revenues of Rs2,298.91 crore for the previous quarter ended 31st March 2006.
