Apollo Tyres Q1 net rises 3.9%

V. Sajeev Kumar Kochi | Updated on August 11, 2011 Published on August 11, 2011

Profitability under pressure due to rising rubber prices, sluggish overseas growth

The 38th annual general meeting of Apollo Tyres Ltd held here today approved the annual dividend payout of 50 per cent (Rs 0.50 an equity share), for the year ended March 31.

The company’s consolidated revenues for the first quarter grew 55 per cent. However, factors such as continuing all-time high natural rubber prices together with sluggish growth in some major markets had a dampening impact on the profitability for the quarter.

Of particular concern is the South African market. With the demand failing to pick up adequately, the high cost of manufacturing in South Africa combined with a growing influx of Chinese tyres, have together posed an enormous challenge to the domestic industry.

The net sales of the company were up 55 per cent at Rs 2,820 crore from Rs 1,820 crore and the operating profit increased 20 per cent to Rs 240 crore from Rs 200 crore. The net profit was up 3.9 per cent at Rs 77.1 crore (Rs 74.2 crore).

Mr Onkar S. Kanwar, Chairman, said that this will be yet another difficult year for the company.

In our largest market in India, inability to raise prices in time is having an adverse impact on all Indian tyre manufacturers. Some of the players have posted negative results and this will influence overall investments in the sector. Europe continues to do well, despite high raw material prices.

However, the Government inaction on large-scale import of tyres into South Africa is taking a toll on the tyre manufacturing industry. What has further contributed to the situation is the high cost of manufacturing and recurring wage negotiations in South Africa.

“However, I continue to remain optimistic about the company’s ability to negotiate these challenges, especially given the multiple action we have already deployed across geographies, to increase internal efficiencies, he added.

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Published on August 11, 2011
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