Hero MotoCorp (HEROMOTOCO) Q4 01/02 earnings summary

Executive summary

• FY02 motorcycle sales rose 38% to 1.425 million units; total income grew 42% to ₹4,539.49 crore and net profit rose 87.5% to ₹462.93 crore.

• Became the world’s largest individual two-wheeler manufacturer; motorcycle market share reached 48%, with Splendor sales of 756,000 units.

Financial highlights

• Net sales increased 40.8% to ₹4,465.43 crore; PBT rose 84% to ₹694.38 crore and PAT increased 87.5% to ₹462.93 crore.

• Operating profit before other income advanced 67% to ₹620.84 crore; EBITDA margin improved to 15.9% from 14.5%.

• Other income rose to ₹74.06 crore from ₹20.2 crore, including ₹29.54 crore net profit on investment sales and ₹28 crore dividend income.

• EPS was ₹23.18 per ₹2 share, versus ₹12.36; reported financial highlights round EPS to ₹23.2.

Outlook and guidance

• FY03 volume target: 1.8 million motorcycles, implying planned 26% growth; expected market share of 48% in motorcycles and 35% in two-wheelers.

• Planned capacity expansion from 1.5 million to 2 million units over one year; feasibility work began for a third plant beyond existing capacity.

• Two launches beyond Dawn planned: a 100–150cc motorcycle in Sep–Oct 2002 and a 200cc-plus model in Q1 2003.

• Industry outlook projected Indian two-wheeler sales CAGR of 5–10% over five years and motorcycle CAGR near 10%; volume forecast was 6–7 million by FY07.

• Long-term volume forecast of 2.5 million motorcycles by FY07, with over 50% motorcycle market share; forecasts carry risks and actual results may differ.