Apollo Tyres' net profit drops 55 percent sequentially
The tyre manufacturer's revenue of Rs 4,624.9 crore dropped 9 percent sequentially, but was nearly 1.6 times more than a year ago.
Apollo Tyres posted a consolidated profit of Rs 127.8 crore on a top line of Rs 4,624.9 crore in the first quarter of financial year (FY) 2021-22.
The profit was 55.5 percent lower sequentially, but a sharp recovery from a year ago when Apollo Tyres incurred a quarterly loss of Rs 134.6 crore.
The Gurgaon-headquartered tyre manufacturer's total income of Rs 4,624.9 crore dropped 9 percent sequentially, but was nearly 1.6 times the Rs 2,900 crore it clocked a year ago.
"We were better prepared in the second wave, as compared to the first wave in Q1 last fiscal," said Onkar Kanwar, Managing Director of Apollo Tyres, in a press statement.
"With the improving business sentiment and demand for our products, we are optimistic of continuing with our stellar performance across geographies,” he added.
The company said it has witnessed a healthy demand momentum in key segments or channels driven by "growing preference for personal mobility, government spending on infrastructure, and import restrictions,” according to its investor presentation dated August 5, 2021.
Nearly 60 percent of Apollo Tyres' revenue comes from Asia-Pacific, Middle East, and Africa, while Europe contributes nearly 25 percent. It has a manufacturing facility each in The Netherlands and Hungary, apart from its Indian operations.
On a cash flow basis, it had a consolidated negative free cash flow of Rs 600 crore in the first quarter of FY 2022, impacted by subdued operating performance in India and the Covid second wave. Apollo Tyres had raised equity capital from Warburg Pincus to strengthen its balance sheet and fund growth in February 2020.
The company increased prices in the replacement segment in the range of 6 percent to 9 percent in the past seven months across product segments. In June 2021, despite COVID-19 headwinds, its fifth factory in India, situated in Andhra Pradesh, was commissioned.
“We are extensively leveraging IT and digitisation to reduce or optimise costs and become future-ready,” said the company in exchange filings.
For its near-term focus on raw materials, the company plans a de-risking business model from single-source suppliers and dependence on specific countries for certain inputs, to strategic tie-ups for raw material sourcing.
Edited by Kunal Talgeri