* Q2 profit falls 27 pct to 4.4 bln rupees
* Op margin falls to 13.9 pct from 15.8 pct y/y
* India motorcycle demand slowing, rivals revving up
(Adds quotes, details)
MUMBAI, Oct 23 India's Hero MotoCorp,
the world's largest two-wheeled vehicle manufacturer, was hit by
rising competition and slowing demand, knocking second quarter
profit down 27 percent.
Motorcycle sales in India have been subdued by high interest
rates and rising fuel costs, while Hero's dominant market share
has been eroded by an aggressive push by former partner Honda
"Sensing the slowdown in the market, we led the way in
adjusting our production plans in August and September, and this
has been reflected in our quarterly sales figures," Pawan
Munjal, managing director, said in a statement.
Hero's operating margin in the quarter stood at 13.86
percent, down from 15.76 percent in the same period a year
previously and 15 percent in the previous quarter.
Shares in the automaker closed 1.8 percent lower on Tuesday
ahead of the results, on a Mumbai market that fell 0.4
Since splitting from Honda Motor Co last year, Hero
has juggled ramping up its exports, which were restricted under
the 26-year joint venture, signing new technology tie-ups to
boost its expertise, and fighting off the domestic threat to its
market share posed by its former partner.
Hero's domestic two-wheeler sales fell 2.9 percent in the
first six months of the fiscal year that began in April, against
a 3.1 percent rise in overall industry sales, according to the
Society of Indian Automobile Manufacturers.
Honda's sales rose 49 percent in the same period.
Hero said profit for the July-September period was 4.41
billion rupees ($82.3 million), below the average market
expectation of 4.87 billion rupees, according to Thomson Reuters
Net sales slumped by 11 percent to 51.15 billion rupees,
below the average analyst estimate of 54.05 billion rupees.
($1 = 53.5750 Indian rupees)
(Reporting by Henry Foy; Editing by Elaine Hardcastle)