Honda Motorcycle & Scooter India (HMSI), the country’s largest scooter maker, reported a 30 percent drop in its net profit for the year ended March 2020 at Rs 1,252 crore, its lowest profit in five years, followed by a 15 percent decrease in volume sales.
The company’s revenues fell 9.6 percent to Rs 23,432 crore last fiscal as higher realization and income from other operations helped partly offset the decline in volume sales, according to a director’s report reviewing the FY20 results.
The drop in profit and revenues happened in a year when the Indian two-wheeler market slipped to a five-year low as slowing economic growth and rising cost on account of new regulations hit demand severely.
This was the second consecutive year when HMSI had registered a decline in profits. In FY19, the company’s profits had dropped 10% to Rs 1,779 crore.
Reviewing the FY20 performance, the director’s report said it was a ‘challenging fiscal year’ which saw the domestic two-wheeler industry sales slow down for the 16th straight month.
HMSI’s realization per vehicle grew 6 percent in FY20 to Rs 46,559, which is about Rs 1,570 higher than Hero MotoCorp. However, the operating profit margins trailed the Hero MotoCorp due to the higher ratio of other expenses to the sales and higher employee cost.
Operating profit margins of HMSI slipped by 194 basis points to 8.84 percent, while HMSI’s operating profit per vehicle is 3 percent lower than Hero MotoCorp at Rs 6,176 per vehicle.