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Apollo Tyres posted 44% drop in consolidated net profit at Rs 141.58 crore for the first quarter ended June 2019, on 1% rise in net sales to Rs 4331.32crore. The company witnessed drop in margins during the quarter. Weak performance at the operational level coupled with rising interest and depreciation charges were the main reason for the drop in bottomline. The European Operation was once again in the red during the quarter.
Commenting on the first quarter results, Onkar S Kanwar, Chairman, Apollo Tyres said, "Our teams have lived to the true ‘unstoppable' spirit in the past quarter, and have bucked the trend in the automotive sector by posting positive sales numbers, despite the headwinds, especially in the Indian market. While the demand from the auto makers remained subdued, there was growth in the replacement market segment. Moving ahead, I am hopeful of the markets recovering and the sales bouncing back around the festive season in India. In Europe, we are performing better than the industry, which is likely to continue going forward as well."
Quarterly Performance
The company witnessed increase in costduring the quarter ended June 2019 on almost all fronts. The raw material cost (inclusive of purchase of stock in trade) as % of sales net of stock adjustments was steady at57.8%. The employee cost rose 104 bps to 14.4% in Q1FY20. Other expenses rose 50 bps to 17.1%. Resultantly, operating margins fell 150 bps 11%. Operating profit fell 12% to Rs 474.93 crore on a y-o-y basis.
Average natural rubber (NR) prices which is the key input cost rosesubstantially during the quarter ended June 2019 on a yearly basis. Prices hovered around Rs 126/Kg during Q1FY20 vis a vis Rs 110/Kg a year ago.
With 6% drop in other income to Rs 27.46 crore, PBIDTfell 12% to Rs 502.4 crore. Interest cost rose 36%to Rs 58.37 crore. Depreciation cost increased 45% at Rs 267.3crore. Thus, PBT fell 48% at Rs 176.72 crore. After considering 640bps decrease in the effective tax rate at around 19.88% and 61% drop in tax provision, PAT fell 44% at Rs 141.58 crore.
During the quarter, the company earned 62% and 25% of its revenues from APMEA (Asia Pacific, Mid East and Africa) and EA (Europe Americas)respectively. Revenues from APMEA rose 1%. EA revenues fell 1%. The other segment comprising of other business entities which constitutes 13% of overall revenues, registered 28% drop.
At the segment front, APEMA business witnessed 31% drop in PBIT at Rs 234.59 crore and constituted 102% of the total segment profit. Loss from EA operations stood at Rs 29.91 crore. Profit from other segment rose 14% at Rs 26.05 crore.
The stocks is currently trading around Rs 145 at BSE.
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