Apollo Tyres has recorded third quarter net profit up 6% at USD45m, although the supplier is cautioning rising rubber and raw material costs are posing a challenge.
Increasing rubber prices are mainly due to a drop in output, rather than significantly more automotive sales, with Apollo looking to absorb higher prices through internal efficiencies.
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“It [automotive] is not rising to that extent,” an industry source in India told just-auto. “It [cost increase] is because of low output in the recent past, low output of rubber production.
“We will have to look internally to increase efficiencies to whatever extent possible, that is the company’s approach today.”
Apollo Tyres consolidated revenue for the nine months (April to December) of FY17 closed at Rs9794 crores while net sales for the third quarter (October to December) grew 17% to finish at Rs3435 crores.
The company recorded volume growth in both Indian, as well as, European operations in the third quarter, led by the passenger vehicle segment.
Quarter 3 Consolidated Performance Highlights :
Q3 FY2016-17 (October – December) vs Quarter 3 FY2015-16:
· Net sales were up 17% to close at Rs34.35bn (Rs3435 crores), as against 29.38bn (Rs2938 crores)
· EBITDA stood at Rs5.37 billion (Rs537 crores), in comparison to Rs 5.19bn (Rs519 crores)
· Net profit was up 6% at Rs2.96bn (Rs296 crores), as compared to Rs 2.79bn (Rs279 crores)
“We have been able to deliver positive numbers in spite of various external factors in the last few months,” said Apollo Tyres Onkar Kanwar. “While uncertainty around GST in India, adversely impacted the commercial vehicle segment, the passenger vehicle segment witnessed good growth.
“European operations grew both in revenue and volume terms, and that too, faster than the industry. Having said that, increasing rubber and other raw material prices in the last few months would be a challenge for us and the industry.”
Data from just-auto’s QUBE service shows Apollo employs more than 16,500 people worldwide and has eight manufacturing facilities in Asia, Europe and Africa.
Net sales for the FY16 fell by 8% to INR117.1bn. Some 41.4% of its business is in the light vehicle sector, 45% in truck and bus, 9.5% in off highway and 1.7% in other sectors. It derives 22.8% of its revenue from the OE tyre business.
Nine months consolidated performance highlights:
9M FY2016-17 (April – December) vs 9M FY 2015-16 (April – December)
· Net sales were up 12% to close at Rs97.94bn (9794 crores) as against Rs87.72bn (Rs8772 crores)
· EBITDA stood at Rs15.81bn (1581 crores) in comparison to Rs15.53 billion (R 1553 crores)
· Net profit closed at Rs8.71bn (871 crores) as against Rs8.51bn (Rs851 crores)
