European operations a highlight of Apollo results
During the most recent quarter turnover at Apollo Tyres increased by just 3.2 per cent to Rs 23.68 billion (£319.39 million), and this modest growth in turnover in the three months to December 31, 2010 is in line with growth throughout the first nine months of the current financial year. During the nine months to the end of last year the company achieved net sales of Rs 61.38 billion (£827.89 million), a year-on year growth of 2.7 per cent. The strongest performer in Apollo Tyres’ global operations proved to be the Netherlands based former Vredestein unit, whose turnover grew 11.7 per cent to Rs 6.49 billion (£87.54 million) in the third quarter and 13.1 per cent to Rs 16.11 billion (£217.29 million) in the nine months to December 31, 2010. Apollo Tyres’ net profit for the third quarter decreased 36.8 per cent to Rs 1.2 billion (£16.19 million) while it decreased 35.9 per cent to Rs 2.5 billion (£33.72 million) in the first months of the year.
Speaking on the results, Apollo Tyres chairman Onkar S Kanwar said: “It has been nine months of investments, planning and fine tuning our products and strategies. The effect of a 70 per cent rise in natural rubber prices in the past year, shows clearly in our results for this period. Despite this, all operations have continued to grow. As a company we continue to seek ways to move beyond the prevailing adverse business conditions and concentrating on newer markets and to provide our customers with better products that match their evolving needs.”
Apollo Tyres also notes that in the 12 months between December 2009 and 2010, the raw material scenario in tyre manufacturing has undergone a “sea change”, primarily from the perspective of key raw material prices, which have skyrocketed beyond expectations. “While natural rubber prices have moved from Rs 119/ kg to Rs 194/ kg in December 2010, they currently rule at over Rs 240/ kg,” the company said in a press release. Combined with that crude oil, a key source of most other inputs has moved from US$ 76/barrel to US$ 85/barrel in 12 months, impacting all other ingredients. However, Apollo comments that manufacturers have not been able to raise tyre prices to compensate for higher inputs costs.