Hero Motocorps Q4FY19 PAT tumbles by 24.50% - What chairman Munjal says about two-wheeler market

Largest two-wheeler maker Hero Motocorp registered a huge 24.50% YoY drop in standalone net profit to Rs 730.32 crore in Q4FY19. A year ago same period, Hero's net profit was at Rs 967.4 crore. On a quarterly basis, Q4FY19 PAT plunges by 5.04% from Rs 769.1 crore in Q3FY19. Revenue from operations slipped by 7.9% to Rs 7,884.96 crore in Q4FY19 versus Rs 8,564.04 crore in Q4FY18, however, was gradually up by 0.25% from Rs 7,864.82 crore of Q3FY18. Net sales in this period stood at 1,781,160 units down by 11.01% from 2,001,595 units in Q4FY18 and below 0.98% as against 1,798,905 units in Q3FY19. 

Earnings Before Interest, Tax, Depreciation, & Amortization (EBIDTA) stood at Rs. 1069 Crore reflecting 13.6% EBIDTA margin ( vs. 16% for Q4 FY'18).

Talking about the result, Dr. Pawan Munjal, Chairman, Hero MotoCorp, said,"We remain committed to creating sustained value for our stakeholders. It is a testimony to our grit and resilience that we registered record sales of 7.8 million units during the fiscal, amidst a sluggish market scenario in several geographies and maintained our Leadership amidst challenging market environments. We also gave shape to our vision of creating multiple hubs of R&D excellence by setting-up our first international
technology center in Germany."

He added, "Our commitment towards environment remains a continuous effort as our upcoming new Garden Factory at Chittoor in Andhra Pradesh leaps towards completion. Most significantly, this fiscal, we forayed into two new product segments the premium motorcycle space with Xtreme 200R' and the 125cc scooter category with 'Destini 125. We are aiming for aggressive market share gains in these categories."

For entire fiscal FY19, Hero posted  a profit after tax (PAT) of Rs 3,385 Crore versus Rs. 3,697 Crore in the previous year. Riding on its highest-ever sales of 78,20,745 units in a financial year (FY), Hero registered revenue of Rs. 33,651 Crore for FY'19, as compared to Rs. 32,230 Crore of FY'18; a growth of 4.4%. EBIDTA margin at 14.7% (vs. 16.4% in the previous year). 

Going forward on FY120, Hero in its financial audit result stated that, it is expected to be yet another challenging year in view of the upcoming stringent emission norms of BS VI. In the interest of the society at large and for the safety of future generations, Hero MotoCorp remains committed to preserving the highest of environmental standards, and is accordingly gearing up to launch its range of BS VI-compliant motorcycles and scooters well before the given timeline. 

However, Munjal said, "While the near-term prospect of the domestic two-wheeler market is likely to remain challenging, the festive season, however, is expected to brighten the sentiment and revive growth in the second half of FY'20."

Ahead of the result, Hero's share price on Sensex ended at Rs 2604.15 per piece down by Rs 13.30 or 0.51%.