Country's largest two-wheeler maker Hero MotoCorp today reported 10.86 per cent decline in its net profit at Rs 548.58 crore for the first quarter ended June 30, 2013, on account of higher tax outgo on its Haridwar facility and lower sales due to early onset of monsoon.
The company had posted a net profit of Rs 615.46 crore during the same period of previous fiscal.
Net sales of the company declined by 1.30 per cent to Rs 6,126.84 crore for the first quarter, as against Rs 6,207.78 crore during the same period of previous financial year, Hero MotoCorp said in a statement.
In terms of volumes, the company's total sales during the quarter stood at 15,59,282 units, down 5.05 per cent from 16,42,292 units sold in the same period of previous fiscal.
"The profit after tax of company in Q1 2014 was lower due to higher tax rate on account of the expiry of five years of 100 per cent exemption in Haridwar, where the largest producing manufacturing plant of the company is situated," the company said.
With the expiry of the tax benefit, the tax liability on the Hero MotoCorp went up to 26.9 per cent for the quarter under review, whereas it was 16.3 per cent in the previous quarter, it added.
Commenting on the results, Hero MotoCorp Managing Director and CEO Pawan Munjal said: "The fact that our PBT has surpassed the previous as well as the corresponding quarter , despite a marginal de-growth in our volumes during the quarter and the overall economic slowdown, is a strong statement of our intent and vision."
He said the company had good sales in April and May but "heavy and early rains in June have slowed down the momentum a bit, but we are optimistic about growth in the second half of the fiscal."
On the outlook, he said: "Our launches that are planned around the festive season should contribute towards accelerating growth. On the new market front, after entering Central America and Africa, we are now geared up for Latin American markets of Peru and Ecuador, which should be in the month of August.
Hero MotoCorp recently set-up its international assembly unit at Kenya.
Shares of Hero MotoCorp today closed at Rs 1,757.75
on the BSE, down 1.50 per cent from its previous close.
India's Hero MotoCorp Q1 net profit falls 10.7 pct as expected
(Reuters) Hero MotoCorp Ltd, India's largest motorcycle maker, posted a 10.7 percent fall in its first-quarter profit, the fourth straight quarterly decline, as margin benefits from price increases were offset by sluggish sales volumes.
Hero reported a net profit of 5.49 billion rupees ($92 million) for the three months to end-June, compared with 6.15 billion rupees a year earlier. Net sales fell to 61.27 billion rupees from 62.47 billion rupees.
Analysts on average had forecast a profit of 5.5 billion rupees, according to Thomson Reuters I/B/E/S.
Hero's vehicle sales dropped 4 percent in the domestic market during the quarter, hurt by fuel price increases and subdued economic growth, according to data from the Society of Indian Automobile Manufacturers.
Hero and its local rival Bajaj Auto Ltd are also facing increased competition from Honda Motor Co, which has been gaining ground in a market where two-wheelers account for the majority of passenger vehicles. ($1 = 59.7650 Indian rupees)