HERO HONDA Third Quarter Results 2008

Hero Honda for the third quarter ended 31st Dec 2008, on a YoY sold just 8.57 lakh bikes as against 8.93 lakh bikes in Q3FY08. Net sales was up just 5% but yet, net profit grew 9.24%. This improvement in the bottomline was mainly on account of the reduction in raw material costs. Revenue from businesses other than manufacturing, such as returns from financial investments, gained 3% Lack of festival discounts also helped. One cannot also take away the fact that despite the slowdown, Hero Honda accounts for at least half of all motorcycles sold in the country, with a 56% market share.
QoQ, the performance has not been all that good, indicating the slowdown in the sector. Net sales dropped 11%and thanks to the 11% reduction in operating expenses, maintaining its interest outgo levels and fall in taxation, PAT was down marginally 1.92% . OPM was down from 15.26% and NPM from 9.57%.

In December, the government came out with the first stimulus package and reduced excise by 4%. The company used this and decided to cut prices strategically. It gave higher reduction on some of the models and a lower reduction on some other models. This helped boost its sales in Dec and is expected to spill over to Jan too.

HDFC Bank has reduced interest rates on auto loans but this is yet to actually come down to the consumer which it hopes will help tide over the slowdown in the coming months. thanks