JK Tyre & Industries reported its first quarterly profit fall in two years on November 5, hurt by weak tyre sales to car, bus and truck makers.
The tyre maker's consolidated net profit for the July-September quarter fell 44% year-on-year to Rs 135 crore.
Its second-quarter revenue declined 7% to Rs 3,622 crore, after dropping for the first time in four years in the April-June period.
Domestic sales of buses and trucks fell 12% in the second quarter, while car makers' sales declined for the first time in more than two years. This hurt JK Tyre's earnings as it garners over 80% its revenue from such customers.
On November 5, JK Tyre's shares on BSE closed 0.33% lower at Rs 389.7 apiece.
Raghupati Singhania, Chairman and Managing Director (CMD), said: “JK Tyre, maintained it’s volumes & presence in the Passenger Car segment despite lower demand in the category. Commercial vehicle segment also witnessed slackening attributable to general election and unusual heavy rains affecting revenue growth during the quarter. Improved export performance helped partly offset the domestic slowdown."
"Operating profit margins were affected by a sharp rise in natural rubber prices, driven by adverse weather conditions and supply chain disruptions. However, the impact was partially mitigated through judicious price increase, product premiumisation and strategic inventory built-up. As we move into the second half of the year, we expect demand to improve, driven by the upcoming festive season, resumption of government infrastructure spends and normalisation of construction, industrial and mining activities post heavy rainy season," said the company in a stock exchange filing.
Indian tyre makers are also grappling with higher rubber costs due to global supply shortages, which pushed up domestic rubber prices by 20% during the quarter.
Larger rival CEAT and Goodyear India also reported a decline in quarterly profit. MRF will report its results later this week.
With inputs from Reuters
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