Eicher Motors' consolidated net profit dropped 40% to Rs 343.34 crore on 2.7% decrease in net sales to Rs 2,111.98 crore in Q2 September 2020 over Q2 September 2019.
On a consolidated basis, profit before tax (PBT) skid 23.6% to Rs 458.53 crore in Q2 September 2020 as against Rs 600.51 crore in Q2 September 2019. Current tax expense for the quarter surged 43.8% to Rs 118.88 crore as against Rs 82.65 crore in Q2 September 2019. EBITDA fell 13% to Rs 471 crore in Q2 FY21 as compared to Rs 541 crore in the same quarter of the previous financial year. The Q2 result was declared post market hours yesterday, 12 November 2020.
Royal Enfield, an unlisted subsidiary and two-wheel manufacturer of the company, sold 1,49,120 motorcycles in the quarter, registering a decline of 9% Y-o-Y (year-on-year) from 1,63,390 motorcycles sold over the same period in FY 2019-20.
Royal Enfield launched the all-new easy cruiser Meteor 350 in the first week of November 2020. In keeping with the International expansion, Royal Enfield commenced local assembly of motorcycles in Argentina in partnership with Grupo Simpa, Royal Enfield's local distributor in the country since 2018.
Commenting on Eicher Motors' Q2 performance, Siddhartha Lal, the managing director (MD) of Eicher Motors, said: "This quarter, we witnessed healthy demand and pick-up in business activities in the automotive industry. It has been encouraging for our motorcycle business at Royal Enfield as we have seen increased revival in consumer sentiment and demand. We have a robust order book and booking numbers are ahead of pre-covid levels. We are working to ensure sustainable volumes in the forthcoming quarters."
For the quarter ended 30 September 2020, due to decline in volumes, the company's commercial vehicle unit, Volvo Eicher Commercial Vehicles (VECV)'s revenue from operations dropped by 13% to Rs 1,703 crore against Rs 1,955 crore in Q2 of last year. In spite of drop in revenues, the EBITDA margin improved to 6.9% for the quarter against 5.4% during corresponding quarter for the last year due to stringent cost reduction measures being undertaken. It incurred a marginal loss of Rs 7 crore during this quarter against a profit of Rs 15 crore in Q2 last year.
Speaking on the VECV's quarterly result, Vinod Aggarwal, the managing director (MD) and chief executive officer (CEO) of VECV, stated: "The commercial vehicles industry (3.5T GVW and above) continued to decline in Q2 despite quarter on quarter improvement. As against Q1 decline of 91%, decline in Q2 was much less at 46% against corresponding quarters of previous year. Within the overall industry, the worst impacted is the Bus segment with decline of 85% in Q2 and 97% in Q1 due to negligible demand from school and staffing segments and adverse impact on inter-city movement through public buses due to COVID-19. At the same time, the initial signs of revival of the industry are quite visible with a positive outlook for the economy going forward. We are witnessing good demand from niche segments such as construction, mining, agriculture and e-commerce amongst others."
"We are also positive on revival in the replacement demand that had been muted for the last two years. Based on these factors, the outlook for the CV industry is positive for the second half of the current year. As against the decline of 46% in the CV industry in Q2 and 72% in the first half, VECV volume drop has been relatively lower at 28% in Q2 and 58% in the first half resulting in improvement in market shares all across. We sold 8,167 vehicles in Q2 and 10,296 vehicles in the first half as against 11,370 vehicles in Q2 and 24701 vehicles in the first half of last year."
Shares of Eicher Motors jumped 4.49% to Rs 2,459.20 on BSE. The stock hit 52-week high at Rs 2,470 during intraday.
Eicher Motors is the listed parent of Royal Enfield, the global leader in middleweight motorcycles. In addition to motorcycles, Eicher has a joint venture with Sweden's AB Volvo - Volvo Eicher Commercial Vehicles (VECV) which operates in India's commercial vehicle space.
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