Goodyear India: Annual Results

For the year-ended December 2004, Goodyear India recorded a turnover increase of 26 per cent to 7.031 billion rupees (£88.3 million), while the operating profit margin dropped to 3.6 per cent from 4.7 per cent. Helped by the sharp drop in the interest costs, the post-tax earnings rose to 52 million rupees from 10 million rupees the year before. The company repaid high-cost debt by borrowing from its parent Goodyear Tire, US. As a result, the interest cost dropped to 75 million to 133 million rupees.

According to India investments publication, Sify, the recent revision in tyre prices and the budget proposal to reduce the excise duty on replacement market tyres could have a positive impact on the company’s performance. The tyre demand is likely to remain robust on account of the sustained growth in the industrial and infrastructure activities. This is also borne out in the increased tyre production recorded last month.

In the report’s words: “Goodyear India’s performance is unlikely to improve significantly unless there is a pronounced decline in the cost of raw materials such as natural rubber and carbon black.” The report also said that Goodyear operated at 96 per cent of its capacity last year, adding that this could hamper growth prospects unless the company switches to marketing outsourced tyres. cja