Hero MotoCorp (HEROMOTOCO) Q4 04/05 earnings summary

Executive summary

• Record FY2004-05 sales of 2.621 million motorcycles, up 27%; domestic motorcycle share reached 50%, and overall two-wheeler share was 40%.

• Total income reached Rs. 7,562.68 crore; PAT rose 11.3% to Rs. 810.47 crore despite higher input costs and lower operating margins.

• Splendor models together sold over one million units; the customer base exceeded 12 million, with Passport CRM membership above two million.

Financial highlights

• Net sales rose 27.2% to Rs. 7,421.65 crore; total income increased to Rs. 7,562.68 crore from Rs. 5,997.47 crore.

• PBT increased 13.5% to Rs. 1,217.25 crore; PAT grew 11.3% to Rs. 810.47 crore.

• OPBDIT rose 19.3% to Rs. 1,169 crore; operating profit before other income increased 19.1% to Rs. 1,080 crore.

• Spare-parts business generated Rs. 362.10 crore in revenue; net cash from operating activities was Rs. 746.83 crore.

Outlook and guidance

• Management expected double-digit growth in the two-wheeler and motorcycle markets over the next three years, assuming GDP growth above 6.3% and per-capita income growth above 6.5%.

• Management expressed confidence in achieving continuous double-digit sales growth, supported by rural development, infrastructure investment, favorable demographics, and monsoon progress.

• New products were planned for FY2005-06 and beyond; a scooter entry was under consideration for an appropriate time, with models lined up over five years.