Eicher Motors, the parent company of Royal Enfield, has reported 21.6 per cent year-on-year decline in its consolidated net profit at Rs 451.8 crore for the first quarter ended June 30, 2019, dented by slowing economic growth, tightening liquidity and regulation driven price increases, that have led to poor consumer sentiment.
"The New Delhi-headquartered company had posted consolidated net profit of Rs 576.2 crore in the same quarter last year," Eicher Motors said in a filing to the Bombay Stock Exchange.
Consolidated revenue dropped 7 per cent to Rs 2,382 crore in Q1 of FY 2019-20 against Rs 2,548 crore in Q1 of FY 2018-19. Royal Enfield sales volume fell by 19 per cent to 181,966 units as compared to 25,286 units sold in the year ago quarter.
During the first quarter, Royal Enfield strengthened its presence in international markets by launching its first exclusive store in Seoul (South Korea) and also added two new stores in Brazil, and one each in Argentina, Indonesia and Vietnam, the company said in the exchange filing.
Earnings before interest, tax, depreciation and amortization (EBITDA) slipped by 24 per cent to Rs 614 crore as compared to Rs 810 crore in the year ago period.
Commenting on Eicher Motors' Q1 performance, Siddhartha Lal, Managing Director of Eicher Motors, said, "The two-wheeler and the CV industry continue to face headwinds on account of weak consumer demand."
In the commercial vehicles segment, VE Commercial Vehicles (VECV) - Eicher's joint-venture with Sweden's AB Volvo - continued to be affected by the demand slowdown, with sales declining by 18 per cent YoY to 13,331 trucks and buses during the June quarter.
For the quarter ended June 2019, VECV's revenue from operations was Rs 2,255 crore, down 14 per cent from Rs 2,609 crore in the same period last year. VECV sold 13,331 trucks and buses in the quarter, registering a decline of 18 per cent over the same period last year.
Speaking on VECV's performance Vinod Aggarwal, CEO VECV said, "The auto industry is currently going through a very challenging phase. Both domestic as well as export market, have been severely impacted with a drop of more than 20 per cent in quarter 1 of this year."
"Overall industry's sentiments are down with an increase in fuel prices, lower availability of loads due to slowdown in economy and consequently low replacement demand," Aggarwal said.
The company expects some pick up to happen from September with the onset of the festive season and also anticipate to see some positive impact of pre-buying with BS VI norms becoming applicable from April 1, 2020, he added.
Meanwhile, shares of Eicher Motors closed 1.18 per cent higher at Rs 16,350.15 apiece on the BSE on Wednesday.
Edited by Chitranjan Kumar