The Board of Directors of Apollo Tyres Ltd today approved the company’s unaudited results for the 1st quarter of the financial year 2011-12. Earlier in the day, at the 38th Annual General Meeting, shareholders approved the annual dividend payout of 50% per share (0.50 per equity share), for the year ended March 31, 2011.
Apollo Tyres’ consolidated revenues for the 1st quarter grew by an extremely positive55%, however factors like continuing all-time high natural rubber prices, along with sluggish growth in some major markets, had a dampening impact on the company’s profitability for the quarter. While both India and Europe continue their growth path, of particular concern has been the South African economy. With demand failing to pick up adequately, the high cost of manufacturing in South Africa, combined with a growing influx of Chinese tyres, have together posed an enormous challenge to the domestic industry.
Quarterly Performance Highlights
Q1 FY 2011-12 (April-June) vs Q1 FY 2010-11
Speaking on the results, Onkar S Kanwar, Chairman, Apollo Tyres Ltd, said: “This will be yet another difficult year for us. In our largest market in India, inability to raise prices in time is having an adverse impact on all Indian tyre manufacturers. Some of the players have already posted negative results and this will influence overall investments in the sector. Europe continues to do well, despite high raw material prices. However, government inaction on large scale import of tyres into South Africa is taking a toll on the tyre manufacturing industry. What has further contributed to the situation is the high cost of manufacturing and recurring wage negotiations in South Africa. However, I continue to remain optimistic about the company’s ability to negotiate these challenges, especially given the multiple actions we have already deployed across geographies, to increase internal efficiencies.”
Cross Currency Reference Chart for Key Quarter Financials
Q1 FY2011-12 Rs Billion US$ million Euro million Net Sales 28.22 662 460 Operating Profit 2.42 53.5 37.2 Net Profit .771 17 11.8.