The Hindu Business Line : Hero Honda clocks 35% rise in Q4 net profit

Mr Pawan Munjal (right), MD & CEO, Hero Honda Motors Ltd, with Mr Anil Dua, Senior Vice-President, Marketing and Sales, at a press conference to announce the annual results in the Capital on Tuesday.

Our Bureau

New Delhi, April 21 Encouraged by a strong performance in the fourth quarter of last year, Hero Honda Motors is confident that it will maintain the same momentum for the first two quarters of the current year.

For the current fiscal, the company has set a target of selling four million units. It will invest Rs 350 crore as capital expenditure during the year.

In his outlook, Mr Pawan Munjal, Managing Director and Chief Executive Officer, Hero Honda, said, “We are very confident of our performance for the first and the second quarter of the fiscal.”

His statement comes at a time when most auto companies are concerned about market conditions and when banks too have reduced lending drastically, especially for the two-wheeler industry.

Robust sales, softening commodity prices and lower excise duty have swelled Hero Honda Motors’ profits by 35 per cent for the fourth quarter ended March 31, 2009. The 13 per cent increase in sales is higher than the industry average in the same period.

The board has recommended a dividend of Rs 20 a share of Rs 2.

For the financial year 2008-09, the company’s net profit stood at Rs 1,281.76 crore, a 32 per cent increase from the Rs 967.88 crore recorded in the previous fiscal. Net sales rose to Rs 12,319.12 crore, a 19 per cent growth over the year ago. The tax rate has come down from 31.5 per cent to 28.5 per cent mainly because of the gains accrued by starting its production in the excise free zone of Haridwar from April last year.

Hero Honda has operated both its plants at Dharuhera and Gurgaon at full capacity of 3 million units. “We are already producing 4,000 units a day at Haridwar and we will produce one million units from this facility. But we would actually push even beyond 4 million units this fiscal,” said Mr Munjal.

The company’s material costs during the quarter have been reduced by one per cent. It expects to gain a similar advantage for the year as it does not foresee raw material prices hardening over the next two-three quarters. The Rs 350 crore investment during the year will be towards product development, investment in engine technology because of new emission norms, setting up a paint shop in Haridwar and plant modernisation at its other facilities. During the fiscal ended March 2009, the company launched nine models, including variants across segments. It is aiming to launch a similar number of models this year too.

The company’s stock price closed at Rs 1,100, 2.1 per cent lower against the previous day’s closing price of Rs 1,124.

Related Stories:
Hero Honda net profit rises despite lower sales
Hero Honda boosts production at Haridwar
Hero Honda riding strong on difficult economic terrain

More Stories on : Two/Three Wheelers | Hero Honda Motors Ltd

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