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Informist, Thursday, Aug 8, 2024

By Narayana Krishna

HYDERABAD - Weak sales, increased input costs, and exceptional costs related to employees dragged Apollo Tyres Ltd's consolidated earnings for the June quarter. The company's consolidated net profit for the quarter fell 24% year-on-year to 3.02 bln rupees, below Street estimates. Revenue from operations for the quarter rose 1.5% to 63.35 bln rupees. Sequentially, the net profit fell 14.7%, while revenue rose 1.2%.

Analysts had estimated the company's consolidated net profit to be 3.97 bln rupees on revenue of 63.6 bln rupees.

For Apr-Jun, Apollo Tyres' sales from the Asia Pacific, West Asia, and Africa regions were up 5% on year to 47.14 bln rupees, led by replacements and exports. In Europe, the company's sales declined 1.5% on year to 17.15 bln rupees due to a weak season. Sales in other regions, which include the Americas and corporate sales, fell 16% on year to 9.8 bln rupees.

Apollo Tyres said growth in India and the West Asian region will continue in the coming quarters, while Europe is also expected to do well, considering the current challenging market conditions.

Apollo Tyres reported an exceptional loss of 404.12 mln rupees due to costs related to employee settlements, the closure of a subsidiary company, and expenses related to the producer responsibility of recycling old tyres, the company said in an exchange filing.

Apollo Tyres' earnings before interest, tax, depreciation, and amortisation, or EBITDA, margin for the quarter shrank by nearly 250 basis points on year to 14.35%, while EBITDA was at 9.09 bln rupees. Analysts expected the company's EBITDA margin to be in the 15.5-15.9% range, while EBITDA was estimated at 10.1 bln rupees.

The fall in margins was mainly due to increased raw material costs and exceptional costs. Prices of rubber, the key raw material in tyre making, were up nearly 5% during Apr-Jun, impacting the costs. The company's input cost for the quarter was up 7% on year to 30.79 bln rupees. Total expenditure for the quarter was up 3.7% on year to 59.02 bln rupees.

At 0921 IST, Apollo Tyres' shares traded at 511.65 rupees on the National Stock Exchange, up 1.7% over Wednesday.  End

US$1 = 83.93 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Manisha Baxla

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