Hero MotoCorp (HEROMOTOCO) Q4 02/03 earnings summary

Executive summary

• FY02/03 motorcycle sales rose 17.7% to 1.68 million units; net sales increased 14.2% to Rs.5,101.71 crore and PAT rose 25.5% to Rs.580.76 crore.

• Operating margins expanded despite price cuts and slower industry growth, supported by lower material costs, manufacturing efficiencies and productivity gains.

Financial highlights

• Net sales Rs.5,101.71 crore, up 14.2% YoY; total income Rs.5,194.58 crore, up 14.4%.

• PBT Rs.884.56 crore, up 27.4%; PAT Rs.580.76 crore, up 25.5% from Rs.462.93 crore.

• OPBDIT Rs.848.65 crore, up 26.6%; OPBDIT/net sales 16.6%, versus 15.0% in FY01/02.

• Operating profit before other income Rs.792 crore, up 27.5%; operating margin 15.5%, versus 13.9%.

• Material costs/net sales declined to 68.0% from 69.4%, helping offset price discounts and higher selling and distribution expenses.

Outlook and guidance

• FY03/04 motorcycle market growth forecast above 15%; two-wheeler and motorcycle markets expected to post double-digit growth over the next three years.

• Medium-term priorities: maintain market leadership, deliver double-digit volume and revenue growth, and grow the bottom line faster than the top line.

• New models and technologies are expected to widen consumer choice and support growth; intense competition and aggressive pricing are anticipated over the next 36 months.