OLD STOCK, FALLING SALES DENT HERO’S PROFIT, MARGIN

NEWDELHI: Liquidation of Bharat Stage III compliant two-wheelers and decline in unit sales made a dent in India’s largest twowheeler company net profit, which declined 13.86% in the March quarter from a year ago period.

For the fourth quarter of 2016-17, Hero’s net profit declined from ₹833.29 crore in the year ago period to ₹717.75 crore. Hero also missed estimates of a Bloomberg poll of 25 analysts who had projected a profit of ₹741.3 crore.

Net sales declined to ₹7606.31 crore from ₹8227.93 crore and the company sold 1.6 million scooters and motorcycles in the quarter, down from 1.72 million a year ago. Ebitda for the quarter declined to 12.79% from 12.66% in the year ago period.

The company in a statement said that it had taken a proactive approach towards the launch of BS IV compliant vehicles, and liquidated large BS III inventory leading up to March 29.

“In the last two days of the month, the company took some tactical steps to assist its dealers and incentivise the customers with an objective to liquidate the remaining BS III stocks, resulting in a one-time impact on the margins of the fourth quarter,” it said in a statement.

This was second straight quarterly decline in profits for the New Delhi-based firm that has also ceded considerable amount of market share to its former partner and now a fierce rival Honda Motorcycle & Scooters India.

The results come on the back of a strong September quarter, when Hero posted its highest ever profit for a quarter at ₹1,004.22 crore with good rains boosting consumer demand in the run up to the festive season.