Apollo Tyres - the leading tyre maker in India and having its presence in three continents have reported improved performance in the quarter ended December 11. The company has reported strong 36% increase in the consolidated revenues at Rs 3228.24 crore aided by improvement in volume, price, mix and depreciation of rupee. OPM continued to be under pressure on y-o-y basis (down by 150 bps to 10%) on the back of increase in the raw material prices but reported q-o-q improvement (200 bps) and led Operating profit up 19% to Rs 324.35 crore. However, the company has provided Rs 29.38 crore for entering settlement with South African Competition Commission in the quarter, which resulted Net Profit to tumble by 19% to Rs 98.04 crore. On Sequential basis, the company has reported 12% increase in the consolidated total income from operations and 26% increase in the Net Profit.

On the standalone front, the company has reported 46% increase in the total income from operations at Rs 2093.22 crore and 21% dip in the Net Profit at Rs 42.57 crore in the quarter under review

Quarterly Performance:

For the quarter ended December 11, the company has reported 36% increase in the consolidated revenues at Rs 3228.24 crore, thanks to 20% increase in the volumes and 16% improvement in the price and mix. On the other hand, revenue growth was also boosted by the volume, price and mix in Indian and South African operations and positively impacted by currency fluctuations in the European operations.

Revenues from Indian operations which constitute major 63% of the total revenues grew 46% to Rs 2093.22 crore. Revenue growth was driven by 24% volume increase and 22% growth in the price and mix. At segment level, the Indian operations margins slipped 230 bps to 5.8% (However, it has improved 40 bps q-o-q) mainly on the back of spike in the raw material cost. The segment profit grew 5% and constituted 55% of the total segment profit.

European operations reported healthy 26% increase in the revenues at Rs 819.75 crore mainly aided by depreciation of rupee (14% growth) and 12% on price and mix. The volumes remained flat on y-o-y basis. The European operations has witnessed lower raw material prices in this quarter, resultantly segment margins jumped up 210 bps to 15.7% and led 46% jump in the segment profit at Rs 128.97 crore.

South African operations reported 28% growth in revenue at Rs 383.16 crore and constituted 12% of the total revenues. The growth in the revenues was aided by 23% increase in the volumes and 5% improvement through mix. The company has to incurred ZAR 45 million on account of entering settlement with South African Competition Commission in the quarter. This accounts EO expense of Rs 29.38 crore. Thus, spike in the raw material cost and EO has pulled down the SA operations reported loss of Rs 29.64 crore at segment level.

The Indian and South African operations have witnessed spike in the raw material cost in the quarter under review. The Raw material cost as % of sales net of stock adjustments jumped up 550 bps to 62.2% in the quarter under review. On the other hand the rest expenditure heads has reported 100-270 bps dip. Operating profit was thus curtailed 19% to Rs 324.35 crore.

The other income slipped 34% to Rs 3.31 crore and that of Interest cost increased 38% to Rs 327.66 crore and depreciation 22% to Rs 82.36 crore. With EO of Rs 29.38 crore, PBT after EO tumbled 10% to Rs 142.85 crore. Taxation has elevated 19% to Rs 44.43 crore and pulled PBT further down 18% to Rs 98.42 crore.

After accounting 43% increase in the loss from associates at Rs 0.48 crore and income from MI at Rs 0.10 crore, Net Profit was down 19% to Rs 98.04 crore.

YTD performance:

For the nine months ended December 11, the company has reported marginal 2% increase in the Net Profit at Rs 252.94 crore over 45% increase in the total revenues at Rs 8921.89 crore. OPM slipped 170 bps to 9% and curtailed growth in Operating Profit by 23% to Rs 805.87 crore. Spike in the interest cost by 53% to Rs 200.48 crore and 19% increase in depreciation to Rs 235.41 crore paired with EO expense of Rs 29.38 crore has muted the growth in the Net Profit.

Apollo Tyres: Consolidated Results