Hero MotoCorp Q2 net profit rises 9 percent

New Delhi, Oct 23 (IANS) Two-wheeler maker Hero MotoCorp Wednesday reported a 9.07 percent increase in its second quarter net profit which stood at Rs.481 crore from Rs.441 crore in the corresponding quarter of the 2012-13.

The company's turnover which includes proceeds from net sales and other operating income rose by 10.39 percent to Rs.5,726 crore from Rs.5,187 crore reported in the second quarter of last fiscal.

The firm's EBIDTA (earnings before interest, tax, depreciation and amortisation) margin stood at 14.5 percent. Sales during the quarter under review stood at 1,416,276 units.

"With our performance in the second quarter, we have clearly demonstrated that we can have good margins even as we strengthen our market leadership," said Pawan Munjal, managing director and chief executive, Hero MotoCorp said in a statement.

"Rupee depreciation has pulled up the costs of essential commodities. Going forward, these higher input prices, combined with increasing labour costs, are likely to put a lot of pressure on margins in the industry."

The company said that it is hopeful of achieving healthy sales during the ongoing festive season.

"Sentiments are positive and there is a momentum for us in the market, and we are definitely looking at demonstrating our leadership by record dispatch and retail sales during the festive period," Munjal added.

Recently, the two-wheeler manufacturer unveiled 15 new models of its motorcycles and scooters which will be launched during the current fiscal.

The company is also trying to spur up its in-house technology development at its research and development (R&D) centre and has also tied up with three international companies for technology alliances.

Hero MotoCorp can use erstwhile partner Honda's technology inputs till 2014. Both the companies ended there 27-year-old joint venture two years ago.

The two-wheeler major which is currently on an international expansion drive after ending its JV with Honda, hopes to enter markets in Turkey and Egypt soon.

In the short-term, the company plans to launch its brand of products in 10 more international markets by the end of this year.

In the long term, the company envisions an annual production capacity of 12 million units per year manufactured in over 20 facilities across the globe.

The company also aims to have a turnover of Rs.60,000 crore per annum by 2020 from last fiscal's turnover of around Rs.25,000 crore.

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Hero MotoCorp Q2 profit rises 9 pct, beats estimates

By Aradhana Aravindan

MUMBAI (Reuters) - Hero MotoCorp Ltd , which posted its first profit gain in five quarters, aims to sell motorcycles in eight more overseas markets by March to ramp up its export earnings in response to an increasingly combative home market.

Hero, like rival Bajaj Auto Ltd , has been pushing sales abroad to make up for shrinking market share in India. It plans for exports to account for 10 percent of sales in the next four to five years.

"Now we are in 10 overseas markets, and we are getting into a rapid launch phase in the second half and we plan to add eight more markets in the next six months," Anil Dua, senior vice president of sales and marketing, told Reuters. "We expect (exports) to be flat in the second half. In the next year we expect them to really start growing."

India's largest maker of two-wheeled vehicles reported on Wednesday net profit of 4.81 billion rupees for the fiscal second quarter ended September 30. That compared with 4.41 billion rupees a year earlier, and the 4.63 billion rupees mean estimate of 14 analysts according to Thomson Reuters I/B/E/S.

Sales rose 11 percent to 57 billion rupees, matching analyst estimates. In volume terms, sales rose 6 percent from a year earlier, when the company reduced production to adjust its inventory.

The company attributed the gain primarily to a low comparison base and increased shipments ahead of the September-December festive season when many Indians consider it auspicious to buy big-ticket items such as vehicles.

"The sentiments are positive and there is a momentum for us in the market," CEO Pawan Munjal said in a statement, adding that rising input and labour costs could pressure margins in the auto industry.

OVERSEAS PRESENCE

Hero's overseas presence pales in comparison to Bajaj, India's biggest motorcycle exporter.

So far in the fiscal year started April, Hero's overseas two-wheeler sales were about one-tenth those of Bajaj, or 2 percent of total sales compared with 37 percent for Bajaj, data from the Society of Indian Automobile Manufacturers (SIAM) shows.

Hero started selling vehicles in Kenya, Burkina Faso and Ivory Coast in July. It has since launched operations in Peru.

The two-wheeler market comprises motorcycles and scooters which are often used in India as family vehicles. Hero's market share was 41.5 percent at September-end from 42.7 percent a year earlier, while Honda Motor Co Ltd's local unit had a 22.7 percent share, up from 19.0 percent, according to SIAM. Bajaj, which does not make scooters, accounts for 15.4 percent.

Last week, Bajaj reported profit which beat analyst estimates as a weaker rupee gave its export earnings a boost.

(Reporting by Aradhana Aravindan in Mumbai; Editing by Christopher Cushing)

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BSE Sensex edges lower; Hero MotoCorp falls

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex edged lower on Tuesday, backing away slightly from near three-year highs hit in the previous session, as Hero MotoCorp fell a day ahead of its quarterly earnings, while caution prevailed ahead of a key U.S. monthly jobs report.

The U.S. non-farm payrolls report later in the day may help calibrate bets on when the Federal Reserve would start the expected tapering of its monetary stimulus.

At home, traders are also growing cautious ahead of earnings from major companies such as ICICI Bank and ITC Ltd , while the Reserve Bank of India is due to hold its policy review on October 29.

Still, sentiment remains buoyed as foreign investors continue to purchase Indian shares, remaining net buyers for a twelfth consecutive session on Monday for a combined total of 103.1 billion rupees, according to regulatory and exchange data show.

"Earnings from better business except pharmaceuticals are out, so expect some short-term correction given recent gains" said Paras Adenwala, managing director and principal portfolio manager at Capital Portfolio Advisors.

The benchmark BSE Sensex edged down 0.14 percent, or 28.92 points, to end at 20,864.97 after hitting its highest level since November 2010 on Monday.

The broader Nifty drifted down 0.03 percent, or 2.15 points, to end at 6,202.80.

Hero MotoCorp Ltd fell 1.6 percent ahead of its July-September earnings due on Wednesday.

Hero may miss the consensus operating profit forecast for the July-September quarter, according to Thomson Reuters StarMine data.

Reliance Industries Ltd fell 1 percent on profit-taking after rising more than 5 percent in the last three consecutive sessions until Monday.

Wockhardt Ltd fell 4 percent after Britain's drug regulator revoked the quality compliance certificate for one of its factory in India, the drugmaker said on Tuesday, the third of its plants to be hit by export restrictions this year.

Karnataka Bank Ltd fell 5 percent after its September quarter profit plunged 75 percent to 289.5 million rupees.

However among stocks that gained, Yes Bank Ltd rose 3.7 percent after its net profit rose 21.2 percent to 3.71 billion rupees, beating analysts' estimates.

Indian sugar companies rallied after global raw sugar futures spiked to a one-year high after a fire engulfed four warehouses in Brazil's Santos port, jeopardizing a fifth of monthly exports from the top producer's main terminal.

Shree Renuka Sugars Ltd surged 10.3 percent, Bajaj Hindusthan Ltd gained 4.2 percent, while Balrampur Chini Mills Ltd rose 1.5 percent.

Wipro Ltd rose 1.7 percent.

(Editing by Anand Basu)

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