Apollo Registers 63% Sales Growth
During the 2009-10 financial year sales at Apollo Tyres’ operation in India, the Netherlands and South Africa increased 63 per cent to Rs 81.2 billion (₤1.2 billion), with operating profit growing from Rs 4.4 billion to Rs 11.9 billion (₤175.0 million) and net profit leaping 364 per cent to Rs 6.5 billion (₤95.6 million) – a result company chairman Onkar S Kanwar described as “an impressive performance by the company.
While India has led from the front, each of our operations has ensured a comeback after a hard year,” Kanwar continued. “As I see it, while the overall demand scenario will continue to play a positive role in the growth of the tyre industry, the unsubstantiated rise in natural rubber prices of over 150 per cent in just 14 months is going to be a dampener and a huge challenge. Also for cross-continent operations like ours currency volatility could play a critical role, especially a weaker euro.”
Indian market sales naturally accounted for the lion’s share of Apollo Tyres’ 2009-10 result. Net sales there were Rs 50.3 billion (₤739.7 million), 62 per cent of the company’s global total and up 24 per cent on the previous year. Operating profit in India grew from Rs 3.4 billion to Rs 7.9 billion (₤116.2 million) while net profit increased from Rs 1 billion to Rs 4.1 billion (₤60.3 million). Exports from India grew up nearly 27 per cent.
“This has been the best annual performance by our Indian Operations to achieve a turnover of over Rs 50 billion,” Kanwar commented. “With our Chennai plant coming on-stream and the extra capacity, I expect this to give greater traction in domestic sales and exports out of India in the current year.” While Netherlands based Apollo-Vredestein only accounted for 24 per cent of Apollo’s consolidated revenues during the year, the company reports its May 2009 acquisition is a “major factor” contributing to its 63 per cent jump in sales during the year.
A “stellar” performance in the Indian market is another reason behind this increase, the tyre maker adds. Worldwide, replacement market sales made up 83 per cent of the total; segment-wise, truck and bus tyres accounted for 47 per cent of all revenue generated, passenger car tyres 33 per cent, light truck nine per cent, agricultural and off-road nine per cent, while other segments accounted for two per cent of revenues.
In India, the sharpest growth has occurred in the passenger car tyre segment, which has grown 36 per cent on the previous financial year. Apollo Tyres South Africa grew 18 per cent by volume in the domestic South African market, registering an overall growth of 13 per cent, while Apollo Vredestein Banden BV benefitted from a colder than average European winter – following what Apollo describes as a “slow year”, sales of winter tyres grew 23 per cent.