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New Delhi, Oct 18 Increased pressures on margins mainly due to high input costs has led to Hero Honda Motor Company on Thursday posting a five per cent decline in its net profit for the second quarter ended September 2007 as against the corresponding quarter last year.

However, its income from operations increased in the same proportion with its sales in the premium segment bikes doubling in the first half of 2007. “The last few months have been a disappointment for the auto industry with rising interest rates hurting sales. However, we have been able to post better than industry figures,” said Mr Brijmohan Lall, Chairman, Hero Honda Motors Ltd.

Hero Honda, with about 50 per cent share of the domestic motorcycles market, said that despite a 14 per cent decline in the entry segment bikes in the first half of 2007, the company was able to record a 23 per cent increase in the sale of its 100 cc bike, CD Deluxe. The company said that in the 125 cc segment too, it was able to grow at 40 per cent.

“We have been focusing on cost management across functions. There has also been some respite in input costs such as aluminium during the last quarter. Our financial numbers in Q2 (July-September 2007) reflect these developments. As for the future, a lot will depend on the interest rates movement, and commodity prices,” Mr Pawan Munjal, Managing Director and CEO, Hero Honda Motors Ltd, said in a statement.

The company sold 7,56,633 units of motorcycles in the quarter as against 7,51,967 units in the same period last year, reporting a marginal increase of 0.62 per cent.

More Stories on : Financial Performance | Two/Three Wheelers | Hero Honda Motors Ltd

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