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| Hero
Honda Motors reports financial results for the Year 2005-06
- Net profit growth of 20%
- Dividend of 1000% declared
- Announces 3rd manufacturing plant
- Announces 8 new launches for year 2006-07
- To launch India’s first Fuel Injection (FI) motorcycle in June 2006
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30 May 2006 , New Delhi : Hero Honda Motors Ltd., the
‘World No.1’ two-wheeler company for the fifth consecutive year, ended the
financial year 2005-06 with a profitable growth, market leadership, and a
series of industry defining initiatives.
The company announced plans
for its third plant today. Jaipur has been selected as the site. The company
announced an investment of Rs. 320 crore in the plant to install a
production capacity of 5,00,000 units, expandable to a capacity of one
million. The plant will be commissioned within 1 year.
The company
also announced eight new launches in the year 2006-07, to strengthen its
product portfolio across segments.
In line with its lineage of
introducing the world’s best technologies to India, Hero Honda announced the
launch of India’s first motorcycle with Fuel Injection (FI) technology in
June 2006, with the launch of 125 cc Glamour FI. With this, Honda Motor Co.
will debut this technology globally in 125 cc category, with Hero Honda.
| Financial Performance - Yearly |
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| Parameter |
FY 2005 – 06 |
FY 2004 – 05 |
Growth |
| Total Turnover |
Rs. 8866.71 Crores |
Rs.7558.55 Crores |
17% |
| Profit Before Tax |
Rs.1412.24 Crores |
Rs.1217.25 crores |
16% |
| Profit After Tax |
Rs. 971.34 Crores |
Rs. 810.47 Crores |
20% |
| Operating margin |
14.45% |
14.56% |
|
| EBIDTA margin |
15.70% |
15.75% |
|
| Earnings Per Share (EPS) |
Rs. 48.64 |
Rs.40.59 |
20% |
| Dividend |
Rs.20.00 |
Rs. 20.00 |
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| Fourth quarter |
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| Parameter |
Quarter ended March 31, 2006 |
Quarter ended March 31, 2005 |
Growth |
| Total Turnover |
Rs. 2298.91 Crores |
Rs. 1976.09 Crores |
16% |
| Profit Before Tax |
Rs. 379.68 Crores |
Rs. 303.07 crores |
25% |
| Profit After Tax |
Rs. 267.19 Crores |
Rs. 207.11 Crores |
29% |
| Operating margin |
14.92% |
13.78% |
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| EBIDTA margin |
16.10% |
15.11% |
|
| Earnings Per Share (EPS) |
Rs. 13.38 |
Rs. 10.37 |
29% |
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In line with the company’s dividend policy, the Board of Directors of the
company declared a dividend of Rs. 20.00 per share (1000%). The total amount
of outflow on account of dividend including withholding tax would thereby be
Rs. 455.39 crore.
Update on Business Strategies
Sales
and market share leadership
Hero Honda crossed a unit sales
threshold of 3 million units in the FY 2005-06, which is a worldwide first.
This helped the company achieve the distinction of having a 15 million
strong customer base since its inception. The company maintained its market
leadership position with a healthy 40% share in the two wheeler industry.
Extending brand equity to new categories
Year 2005-06 saw the
entry of Hero Honda into the scooter segment with 100 cc Pleasure, targeted
primarily at women, which was launched in January 2006. Pleasure has been
received very well by the market and is expected to revitalize the scooter
market in India, and enhance the share of scooters amongst overall two
wheelers.
Hero Honda has also delivered an industry first by
launching a business line for pre-owned motorcycles branded as Hero Honda
Sure!
Technological leadership
Continuing its two
decade old tradition of introducing best-in-class products and technologies,
Hero Honda introduced two new engine platforms (Quantum Core) for the 125 cc
and 150 cc motorcycle categories, thereby consolidating its technological
leadership in the motorcycle segment. These engines provide higher power and
higher fuel efficiency, currently unmatched in the industry.
Stronger product portfolio
A total of 4 new motorcycles were
launched in 2005-06 - CD Deluxe, the 125 cc Glamour, the 150 cc Achiever and
the 125 cc Super Splendor all with long term warranty, and superior
proposition in terms of fuel consumption and power delivery. Company’s new
motorcycle launches have been a whopping success.
Path
breaking retail and consumer initiatives
FY 2005-06, also
witnessed industry redefining market initiatives by Hero Honda – launch of
women exclusive retail outlets for the new scooter, Pleasure, under the
brand name, Just4Her and launch of Lady Rider, India’s first women rider
club.
Capacity expansion
To address the growing
demand for its products, the company continued its capacity expansion
initiatives in 2005-06 to take the total capacity to 3.9 million units.
Expansion of 4,50,000 units at Gurgaon plan is already completed at an
investment of Rs. 47 crores. Expansion of additional 4,50,000 units is
underway at Dharuhera plant at an investment of Rs. 96 crores, which would
be operational by August 2006.
Speaking on the occasion, Mr.
Brijmohan Lall, Chairman, Hero Honda Motors said, “It has been a challenging
year but we have pursued our strategic objectives with unabated zeal and
maintained market leadership while delivering sustained profits”.
“We
are committed to delivering highest possible returns to our shareholders,
and our present dividend announcement reflects that”, he added.
According to Mr. Pawan Munjal, Managing Director, Hero Honda Motors, “Our
new product launches in the year 2005-06 have been well received. Our
scooter launch has seen a very encouraging market response. In motorcycles,
new launches contribute 36% to our turnover, basis the success of Super
Splendor & CD Deluxe. We took a number of market defining steps towards the
last quarter, the impact of which could not be fully realized in the last
year. Coupled with an even stronger pipeline of initiatives including eight
new launches in 2006-07, we look forward to consolidating our leadership in
two wheeler industry.”
“We are willing to trade certain short term
gains to drive long term growth. Hero Honda is well-equipped to meet new
challenges and set new precedents to remain at the forefront of the growing
two wheeler market.”, he added.
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