Eicher Motors report 44.2% y-o- y decline in net profit to ₹304 crore as sales decline due to the Covid -19 pandemic2 min read . Updated: 12 Jun 2020, 07:44 PM IST
- The net profit of the company during the corresponding quarter stood at ₹545 crore
- The company also experienced decline in sales during the first two months of the quarter as result of the economic slowdown
Eicher Motors – manufacturer of Royal Enfield brand of premium motorcycles – on Friday reported a 44.22% year-on-year decrease in net profit to ₹304 crore, for the quarter ending March 31, as a result of a significant decline in retail sales in March, due to the adverse impact of the Covid -19 pandemic and the subsequent lockdown measures imposed the by the centre and states to contain the spread of the virus.
The net profit of the company during the corresponding quarter stood at ₹545 crore.
The company also experienced decline in sales during the first two months of the quarter as result of the economic slowdown.
Net sales during the period decreased by 11.68% year on year to 2208 crore as a consequence of 17% decrease in vehicle sales during the period to 163083 units.
At an operating level, the company’s operating profit or the earnings before interest, tax, depreciation and amortization (EBITDA) declined by 36.93% year on year to ₹432 crore, when compared to ₹685 crore in the corresponding period. The operating margins during the period also contracted significantly by 784 basis points to 19.56% compared to 27.40% in the year ago period.
Acording to Siddhartha Lal, managing director, Eicher Motors, this has been a tough year overall for the industry, and the global pandemic during the last quarter brought with it unprecedented challenges and disruptive changes.
“With commitment to our long term plans, we moved swiftly to tackle the roadblocks, to safeguard our businesses and to do our bit towards relief and support measures. Now, as the lockdown is easing out, we see strong initial customer interest and confidence. We have built our businesses on solid fundamentals. We have a strong balance sheet and cash position, a robust business model with a focused approach, and an exceptional management team at Royal Enfield and VECV," added Lal.
For the entire FY 20, Eicher Motors reported a 17.06% decrease in net profit to ₹1827 crore, but revenues during the year declined by 6.56% to ₹9154 crore.
In the commercial vehicle business, where Eicher operates with Volvo, in a joint venture known as Volvo Eicher Commercial Vehicles Ltd, which reported a significant drop in net profit by 81.29% to ₹26 crore, for the quarter. The net sales during the period dropped by 35% to ₹2101 crore as truck sales fell by double digits due to the slowdown in the economy and change in the freight loading norms.