Hero MotoCorp Q2 net profit rises 9 percent

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.