Margins under pressure due to steep increase in raw material prices
The Board of Directors of Apollo Tyres Ltd today approved the company’s unaudited results for the 1st quarter of the financial year 2017-18.
For the quarter ended June 30, 2017, Apollo Tyres Ltd, on a consolidated level, reported a profit of Rs 88 crores on the net sales of Rs 3258 crores. While Indian Operations’ grew marginally to close at Rs 2284 crores, European Operations clocked a revenue of Rs 1016 crores on the back of good volume growth in the passenger vehicle segment. The first quarter revenue, in India, was subdued because of the pre-GST destocking by the company’s business partners, and due to the confusion over switchover from BS III to BS IV emission norms in commercial vehicles.
Quarter 1 Consolidated Performance Highlights
Q1 FY2017-18 (April – June) vs Q1 FY2016-17
· Net sales reported was Rs 32.58 billion (Rs 3258 crore) as compared to Rs 32.92 billion (Rs 3292 crore)
· Operating profit closed at Rs 2.82 billion (Rs 282 crore) as against Rs 5.67 billion (Rs 567 crore)
· Net profit stood at Rs 88.3 crore as compared to Rs 315 crore in the previous fiscal
Commenting on the results, Onkar S Kanwar, Chairman, Apollo Tyres Ltd said, “The results reflect the impact of the rising raw material prices on our Operations. Raw material prices as a basket has jumped more than 30% in the first quarter, as compared to the same period last year, and has negatively impacted our margins. While, rubber prices have softened to some extent, other raw materials are still on a higher side, which is likely to put our margins under pressure going forward as well. Considering this, we may need to take price corrections.”
Added Mr Kanwar, “The silver lining for us, is the robust demand from the OEMs and the growing vehicle sales in India, both passenger and commercial, post GST implementation. The recommendation by the Directorate General of Anti Dumping (DGAD) in India to impose anti dumping duty on truck-bus radials from China, has vindicated our stand on the same, and which, once implemented, would be a boost for us in India. In Europe, the increased sales reported by most of the vehicle manufacturers in the first half of the calendar year, would also prove to be a positive for us going forward.”
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