Apollo Tyres impacted by steep raw material costs
India’s Apollo Tyres reported net sales of Rs 32.58 billion ($512.07 million) for Q1 that ended June 30, 2017 compared to Rs 32.92 billion in Q1 2016. Operating profit closed at Rs 2.82 billion ($44.32 million) against Rs 5.67 billion, while the tyre maker’s net profit stood at Rs 88.3 billion ($13.8 million) as compared to Rs 315 crore in the year-ago period.
Onkar Kanwar, chairman of Apollo Tyres, commented: “The results reflect the impact of the rising raw material prices on our operations. Raw material prices as a basket has jumped more than 30% in the first quarter, as compared to the same period last year, and has negatively impacted our margins. While rubber prices have softened to some extent, other raw materials are still on a higher side, which is likely to put our margins under pressure going forward as well. Considering this, we may need to take price corrections.”
Kanwar continued: “The silver lining for us is the robust demand from the OEMs and the growing vehicle sales in India, both passenger and commercial, post Good and Services Tax (GST) implementation. The recommendation by the Directorate General of Anti -Dumping (DGAD) in India to impose anti-dumping duty on truck-bus radials from China has vindicated our stand on the same, and which, once implemented, would be a boost for us in India. In Europe, the increased sales reported by most of the vehicle manufacturers in the first half of the calendar year would also prove to be a positive for us going forward.”