Hero Honda Q1 net up 16.2%, to hike prices

Turnover in the period increased to Rs 2,416.65 crore from Rs 2,007.63 crore in April-June 2005.

Hero Honda Motors Ltd on Tuesday reported a 16.2 per cent rise in net profit in the quarter ended June 30, 2006, at Rs 237.74 crore against Rs 204.45 crore in the corresponding period last year, subdued due to increase in input material prices.

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Company officials said it will hike prices by the end of this month.

Turnover (net of excise) in the period increased to Rs 2,416.65 crore from Rs 2,007.63 crore in April-June 2005, a growth of 20.5 per cent.

Significantly, operating margins for the company dropped to 13.5 per cent in the April-June 2006 quarter from 16.1 per cent in the previous quarter. Raw material costs were up at Rs 1,717 crore against Rs 1,408 crore in Q1FY05.

Company Managing Director Pawan Munjal said bike prices would be increased by this month-end to offset the increase in inputs. However, he refused to specify the quantum of hike or the models, which would see the price increase.

Munjal said the hike in bike costs would see margins recover in the third and fourth quarter, though overall margins were likely to be subdued in the fiscal.

The company has seen market share erode in bikes this quarter against the share in April-June 2005. Munjal said volumes were likely to be subdued in July-August this year due to rains.

However, he expected overall sales to rise by "healthy double digit" for the full fiscal with good sales in the third and fourth quarters.