NEW DELHI :
Eicher Motors Limited - manufacturer of Royal Enfield brand of motorcycles and heavy commercial vehicles - on Tuesday reported 21.5% year on year decline in net profit to ₹452 crore for the quarter ending June 30, on the back of significant decline in sales due to the overall slowdown in the economy and tightening of the credit norms by financial institutions.
In the corresponding quarter, the company reported a net profit of ₹576 crore.
Total revenue of the company declined by 7% to ₹2382 crore when compared to ₹ ₹2548 crore in the year ago period.
The operating profit or the earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 24% year on year to ₹614 crore.
During the quarter the sales of Royal Enfield motorcycles decline by 19% to 181966 units compared to 225286 units sold in the corresponding period.
In the commercial vehicles business, the company - in joint venture with Volvo AB - witnessed a decline of 18% year on year to 13331 units.
The profit of Volvo Eicher Commercial Vehicles (VECV) decline substantially by 68% year on year to ₹38 crore. In the corresponding quarter, the joint venture reported a net profit of ₹118 crore. Revenue also declined by 14% to ₹2255 crore.
According to Siddhartha Lal, managing director , Eicher Motors Ltd, the two-wheeler and the commercial vehicle industry continue to face headwinds on account of weak consumer demand. Sales of Royal Enfield motorcycles declined 19% on year on year basis during the quarter.
“In the commercial vehicle industry, sales have been low due to the weak demand on account of economic slowdown and liquidity and it is also witnessing heavy discounting. However, as a part of our long term commitment to drive modernisation in the industry, VECV unveiled the Eicher Pro 2000 series, India’s first BS VI compliant range of commercial vehicles," added Lal.
“The demand in two-wheeler industry remains weak due to slowing economic growth, tightening liquidity and regulation driven price increases, that have led to poor consumer sentiment. At Royal Enfield, we remain focused on our key priorities, which is to deepen our markets in India and to strengthen our position as a global consumer brand. To reinforce our distribution network in India, we are working on building a network of compact retail format stores," said Vinod Dasari, chief executive, Royal Enfield.