Apollo Tyres reports 9% annual net sales growth, profits down a third

Apollo Tyres Ltd has approved the company’s audited financial results for the fourth quarter (January to March) and the financial year 2010 – 2011. Consolidated annual revenues, taking into account manufacturing bases in India, South Africa and the Netherlands, grew 9 per cent to reach net sales of 88.6 billion rupees (£1.205 billion; 1.386 billion euros; US$1.983 billion). Net profit fell to 4.4 billion rupees from 6.5 billion rupees the previous year.

In the fourth quarter net sales rose 27 per cent to 27.3 billion rupees. Net profit stood at 1.9 billion rupees from 2.6 billion rupees in the same quarter the previous year. However, Apollo reports that natural rubber prices hit a record high of 242 rupees/kg this year, up 70 per cent over the previous financial year, explaining the drop in profits.

Strong winter tyre sales, exports

Sale of winter tyres in the recent European winter tyre season was said to have been “exceptionally strong” for both Apollo and Vredestein branded tyres. Apollo launched its summer and witner tyres into Europe in June. According to the company, its winter tyres “registered a complete sell-out” and order books are already full for the coming next winter season too.

Exports seem to be faring well too. While South African operations registered 24 per cent growth, Apollo India continues to be the largest exporter of passenger car tyres with a 75 per cent share of exports. India now accounts for 62 per cent of revenues, with Europe generating 25 per cent and Africa 13 per cent. Indian operations registered growth of 9 per cent, South Africa 8 per cent, while Europe grew fastest at 12 per cent in revenue terms. The firm’s Chennai plant, which commenced production in 2010, is expected to reach maximum Phase 1 capacity towards the end of 2011.

Commenting on the results, Onkar S Kanwar, chairman, Apollo Tyres Ltd, said: “This has been an extremely challenging year of spiralling raw material prices, especially natural rubber, and closures for over a quarter in one of our Indian plants, and an industry-wide strike in South Africa. These resulted in production and sales losses. Despite these, we have registered a very positive revenue growth across all our operations.”

Referring to the company’s profitability, he added: “The cost push has impacted our bottom line. While price increases have been resorted to, the lag effect impacts margins. This trend of high prices is expected to continue for the next few months. More importantly, it is also availability of natural rubber that is currently a cause of concern.”

The company’s board recommended a dividend payout of 50 per cent, subject to AGM approval.

Related news:

• Kanwar: European Apollo tyre sales to increase 30% by winter

• Apollo Becomes Kwik-Fit “House Brand” in The Netherlands

• T&A Visits Apollo’s Limbda and new Chennai Factories

• Apollo Aiming for ‘At Least’ The Top 10