Hero MotoCorp Q4 profit slips 28%, revenue drops 15% on lower two-wheeler sales

Hero MotoCorp, the largest two-wheeler maker in the world by volumes, reported weak fourth-quarter results as demand in rural markets remained muted.

The company reported a 28% decline in standalone net profit to Rs 627 crore for the fourth quarter from Rs 865 crore in the year-ago period. Analysts had expected profit to be in a range of Rs 575 crore to Rs 685 crore.

The consolidated profit after tax for the quarter was Rs 621 crore, down 30% over the year ago period.

The company’s standalone revenue slipped 15% to Rs 7,422 crore for the quarter from Rs 8,686 crore in the fourth quarter ended March 31, 2020. Consolidated revenue came at Rs 7,497 crore, down from Rs 8.690 crore a year earlier.

Meanwhile, the firm has declared a final dividend at the rate of 1,750%, or Rs 35 per share. This dividend, together with the interim dividend, aggregates to Rs 95 per equity share at the rate of 4,750%.

Other Key Highlights

1) The company sold 11.9 lakh units of two-wheelers in Q4, down from 12.92 lakh in Q3.

2) On a year-on-year basis, volumes declined 24% from 15.68 lakh units in Q4 2020-21.

3) EBITDA was Rs 828 crore for Q4 versus Rs 960 crore for Q3.

4) EBITDA margins declined to 11.2% in Q4 from 12.2% in Q3.

5) For 2021-22 fiscal year, consolidated profit fell 21% to Rs 2,329 crore from Rs 2,936 crore in 2020-21.

6) Revenue from operations in FY22 fell to Rs 29,551 crore from Rs 30,959 crore in FY21.

Management Commentary

Niranjan Gupta, Chief Financial Officer of Hero MotoCorp, said the company expects demand for motorcycles and scooters to see a positive turnaround in the coming months as the economy picks up.

“While concerns related to high input costs continue to remain a challenge, we will keep monitoring the situation and take judicious measures as appropriate,” he said.

Gupta also said the forecast of a normal monsoon is likely to aid the crops. This, in turn, is expected to improve cash flows in rural sector. “All these factors are likely to help in a steady recovery in consumer sentiments and market demand.”

In FY23, the company has lined up multiple product launches in different segments with an aim to continue building its premium portfolio as well as premiumization of existing models. This will help it deliver growth and profitability, Gupta said.