Despite positive H1 results, Apollo wary of slowing growth

Commenting on a half-year that saw the increase in Apollo Tyres’ net profit fall behind sales growth, company chairman and managing director Onkar Kanwar noted that “currency fluctuations, especially a weaker rupee, and continued cost push have impacted our bottom line.” Kanwar described the “near flat growth” in India’s commercial vehicle tyre segment during the first half of the country’s fiscal year as “worrying” and a situation that “could pose a challenge in the coming quarters.” The Apollo chairman said the company’s European business is currently registering strong growth, however his view of the region remains cautious: “We are alert to the broader economic situation there and are keeping a close watch on developments,” he stated.

During the first half of India’s 2012 financial year, the six months to September 30, 2011, Apollo Tyres achieved net sales of Rs 56.9 billion (£712.2 million), an 51.0 per cent increase on the first half of the previous financial year. In the second quarter alone Apollo’s net sales amounted to Rs 28.7 billion (£359.3 million), a figure that represents year-on-year growth of 47.3 per cent. Net profit after tax increased 22.1 per cent to Rs 1.5 billion (£19.5 million) during the first half of the fiscal year, while the second quarter showed a much more robust 46.7 per cent year-on-year improvement, to Rs 781.4 million (£9.8 million).

Breaking the company’s revenue down into regions, India remained by far Apollo’s largest market; its first half net sales of Rs 38.1 billion (£476.4 million) represented 65.8 per cent of the total. Europe, with sales of Rs 13.5 billion (£169.3 million), contributed 23.4 per cent towards the total, while South African sales accounted for 10.1 per cent of total sales. The final 0.7 per cent came from unspecified “other” sales. In the second quarter, India’s sales increased 56.9 per cent year-on-year to Rs 18.4 billion (£230.9 million), while European sales rose 42.8 per cent to Rs 7.5 billion (£93.8 billion). South African sales growth was a more modest 14.8 per cent in the second quarter, to Rs 3.0 billion (£37.9 million).