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Informist, Thursday, Nov. 14, 2024

By Steffy Maria Paul

MUMBAI – Apollo Tyres Ltd. will further raise prices to pass on the increase in raw material prices to consumers, the company's management said during a post-earnings call Thursday. The company said it took a 2% price increase in its truck segment and a 3% price increase in its passenger vehicle segment during Jul-Sept. While the effect of this would have been partly reflected in the latest quarter, the company expects the impact to be seen in the next quarter as well. 

"...we have taken price increases in the domestic replacement segment, and we will continue to navigate the RM (raw material)cost push through well-time price increases," the company said. Apollo Tyres' earnings before interest, tax, depreciation, and amortisation margin for its India operations for the September quarter fell to 12.1% from 19.1% a year ago, owing to a 15% on-year rise in raw material prices. The company expects raw material prices to decline going forward after rising slightly further in Oct-Mar.

The company also expects its volumes to grow in Oct-Dec on the back of improved demand in the second half of the current financial year. The company said it expects the demand momentum for its domestic replacement segment to improve, but that for original equipment manufacturer segment to remain muted in the near term. The company's volumes in its domestic operations saw flattish on-year growth during the quarter. While the domestic replacement segment saw volume grow in mid-single digits, its exports saw a double-digit growth in volumes in Jul-Sept. However, the original equipment manufacturer segment saw a double-digit negative growth in volumes during the quarter. 

Talking about its European market, the company said the market is showing signs of recovery. The EBITDA margin for the company's European operations was up at 14.8% from 14.1% a year ago, despite a slight increase in raw material prices. "The reason on the margin performance is that large part of the raw material cost push was driven by natural rubber, which is a much smaller proportion for the European operations versus the Indian operations...for the western mature markets raw material proportion as a cost is much lower than for markets like India so all that has played into margin support...," the management said. 

The company said that its other expenses were higher during the quarter on account of increased freight charges, higher advertising expenses, and costs incurred for extended producer responsibility. The company's other expenses in Jul-Sept were INR 12.33 billion, up 25.7% on year. The company maintained its capital expenditure guidance of INR 10 billion for 2024-25 (Apr-Mar). 

Apollo Tyres reported a consolidated net profit of INR 2.97 billion for the quarter on revenues of INR 64.37 billion. On Thursday, shares of the company closed at INR 475.30 on the National Stock Exchange, up 4.1%.  End 

Edited by Tanima Banerjee

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