Eicher Motors profit falls 6% in Q3: Key takeaways

Mumbai: Eicher Motors reported a 6.42 per cent year-on-year drop in consolidated profit for the quarter ended December 31 on Thursday, while its sales inched up a mere 1 per cent.

Royal Enfield-maker said its profit came in at Rs 498.70 crore compared with Rs 532.95 crore in the same quarter last year. Sales rose 0.95 per cent to Rs 2,350.45 against Rs 2,328.25 crore.

Here are the key takeaways:

Margins shrink: Margins for the quarter came in at 25.2 per cent, which was 430 basis points lower than 29.5 per cent the company had reported in the same quarter last year.

Royal Enfield’s volumes: Royal Enfield sold 189,143 motorcycles in the quarter, a decline of 2 per cent from 193,164 motorcycles sold over the same period in the last financial year.

Management commentary: “We’ve remained focused on our long-term strategy. We have improved our retail network to bring in further accessibility. We’ve worked on transitioning our product portfolio to comply with the new BS-VI emission norms and also launched the new Royal Enfield Himalayan BS-VI,” said managing director Siddhartha Lal.

“While the commercial vehicle industry continues to face challenges due to slowdown, VECV (Volvo Eicher Commercial Vehicles) remained profitable despite a sharp decline in its volume,” he added.

VECV is Eicher’s joint venture with Sweden's AB Volvo.

VECV’s performance: VECV net profit dropped sharply to Rs 30 crore compared with Rs 76 crore last year. VECV sold 12,391 trucks and buses in the quarter, a decline of 27 per cent from 16,936 trucks and buses sold over the same period in the last financial year.

Challenging times for VECV: “With industry showing no signs of recovery except for some pre-buying, this is one of the worst phases for the CV industry. Our focus on long term initiatives is continuing and we are optimistic that the industry will start growing after some time largely led by investments in infrastructure. At the same time, we are bringing a sharp focus to cost management and improving productivity,” said Vinod Aggarwal, MD and CEO VECV.

Strengthening distribution network: Royal Enfield continues to strengthen distribution network in India and across the world. During the last quarter, Royal Enfield added seven new large format stores and 250 new Studio Format stores in India, taking the total to 1,400 retail touchpoints. In international markets, Royal Enfield added new stores across Thailand, Brazil, Argentina, France and the UK, increasing its overall touchpoints to about 675 stores including 67 exclusive stores. This network expansion, combined with sustained Brand and Marketing initiatives, have more than tripled sales outside India.