Apollo Tyres Q3 net down 18% on high cost, one-time penalty

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Apollo Tyres Q3 net down 18% on high cost, one-time penalty

Apollo Tyres’ net profit for the third quarter fell higher-than-expected 18% year-on-year to Rs 98 crore, hurt by high raw material costs and one-time penalty on its South African subsidiary.

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Moneycontrol Bureau

Apollo Tyres ' net profit for the third quarter fell higher-than-expected 18% year-on-year to Rs 98 crore, hurt by high raw material costs and one-time penalty on its South African subsidiary.

The company's net sales during the three-month period, however, were well ahead of street estimates, up 36% year-on-year to Rs 3,228.2 crore.

Analysts on average had expected Apollo Tyres to report a net profit of Rs 114 crore on revenue of Rs 2,887 crore, according to a CNBC-TV18 poll.

During the third quarter, Apollo Tyres had exceptional loss of Rs 29.4 crore due to a penalty imposed on its South African subsidiary. Apollo Tyres South Africa (ATSA) had entered into settlement agreement with that country's competition commission following the agency's investigation against South African Tyre Manufacturers Conference and four local tyre manufacturers and suppliers, including ATSA, Apollo Tyres said.

The company's raw material costs in the October-December quarter were up 37% from a year ago to Rs 2,000 crore. Interest costs were up 38% to Rs 73 crore.

"The raw material prices have stabilised to some extent, but they continue to remain on the higher side and put our margins under pressure," said Onkar Kanwar, Chairman.

Apollo Tyres' operating profit margin was at 10%, compared with 11.5% in the year ago quarter.

The company said margins could improve in the fourth quarter if raw material costs fell.

Meanwhile, Apollo Tyre's India business rose 47% in the quarter, while South African business grew 27%.

Apollo Tyres shares closed up 4.3% at Rs 75.50 on NSE on Thursday