Hero MotoCorp reports 92% drop in Q1 PAT

The two-wheeler major's net profit slumped 92% to Rs 61.31 crore on a 63% decline in net sales to Rs 2971.54 crore in Q1 FY21 over Q1 FY20.

EBITDA fell 90.7% to Rs 108 crore in Q1 June 2020 from Rs 1,158 crore in Q1 June 2019. EBITDA margin was at 3.6% as on 30 June 2020 as compared to 14.4% as on 30 June 2019.

Profit before tax in the June quarter stood at Rs 79.49 crore, down by 95.8% from Rs 1873.83 crore in the same period last year. Current tax expense declined by 97.5% to 15.80 crore in Q1 June 2020 over Q1 June 2019.

Delivering a positive bottom line, despite only 25% capacity utilization, reflects the resilience of the portfolio and ability to optimize costs and improve productivity, the company said in a statement. It added that sequential monthly sales of the company kept improving during the quarter as markets in several parts of the country gradually re-opened, thereby leading the revival of the domestic two-wheeler sector.

Niranjan Gupta, chief financial officer (CFO), Hero MotoCorp, said, "The COVID-19 period has been an unprecedented challenge for the automotive industry, as indeed for several other sectors and economies around the world. Hero MotoCorp was quick to begin work on cost control and efficiencies that enabled us to limit the impact of the unprecedented times during the first quarter of the financial year.

Cash conservation efforts and rationalization of expenses, along with productivity enhancement measures, have helped us pass through the uncertain period as we now enter the phase of rapid recovery and return of demand. We are already seeing green shoots, and expect them to sustain and get stronger as we move towards the festive season. Our July month sales were more than 95% of pre-covid sales and we do see positive trend moving forward."

On a consolidated basis, the two-wheeler maker's net profit tumbled 95.3% to Rs 59.14 crore on a 63.7% decline in net sales to Rs 2,969.08 crore in Q1 FY21 over Q1 FY20.

The scrip fell 1.34% to Rs 2773.45 on the BSE. It traded in the range of 2766.10 and 2832.75 so far during the day.

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