Hero MotoCorp Q4 Results: Profit, Revenue Fall On Covid-19-Induced Supply Woes

Hero MotoCorp Ltd.’s quarterly profit fell as a pandemic induced lockdown in March ate into the company’s already struggling sales.

That, however, isn’t the only trouble bogging down India’s automakers. Increased upfront insurance costs, a broader consumption slowdown and disruption caused by BS-VI emission norms have also hurt sales.

Yet, the company benefited from a significantly lower tax payout and cheaper raw materials. Tax expense fell 91% over last year to Rs 30 crore. Besides, the transition to BS-VI drove up the earnings per vehicle for Hero MotoCorp by 6% to Rs 46,747.

The company is now in the process of jumpstarting its business. Almost 1,500 of its retail touchpoints were active by the second week of May. It’s now also cutting down spending to improve profitability.

“As we march towards rapid recovery from lockdown, we have taken several measures towards saving cost, improve the productivity of spends, and conserve cash,” said Niranjan Gupta, chief financial officer of Hero MotoCorp, was quoted as saying in a statement. “We have rationalised capex spends for the financial year by half, doubled target for the Leap-II program, and launched an initiative to improve the productivity of our overheads.”

Hero Motocorp expects that these initiatives along with upcoming launches and digital solutions for sales will help the company tackle uncertainties arising from the pandemic.

Shares of Hero MotoCorp ended largely flat, ahead of the results, while the benchmark Nifty 50 closed trade 1.2% down.