India’s largest two-wheeler manufacturer Hero MotoCorp on Tuesday reported a 27% year-on-year drop in net profit at Rs. 441 crore for the July-September quarter on the back of a 14% fall in motorcycle and scooter sales.
Revenues also fell 11% to Rs. 5915 crore during the second quarter.
The company sold 1.3 million vehicles in the second quarter against 1.54 million in the same period last year.
“The two-wheeler market in the county has been adversely impacted due to the overall slowdown and prevailing sentiments since the beginning of this quarter,” said Pawan Munjal, managing director and chief executive officer, Hero MotoCorp.
The company adjusted production in August and September sensing a slowdown in the market, which was reflected in the quarterly sales figures, added Munjal. The operating margin declined 188 basis points (100 basis points is 1 percentage point) year-on-year as production costs went up and the share of less than 125-cc motorcycles increased.
Analysts also said that increased advertising soends may have hit profits.
The economic slowdown and a delayed monsoon that affected rural markets — the key volume driver for motorcycle firms — have hit the two=wheeler industry. Hero’s rival Bajaj Auto also reported flat profit and marginal decline in revenue earlier.