Ceat T2: Excessive commodity costs trigger Ceat Q2 revenue to drop 77% at the same time as revenues enhance

Mumbai: Tires Main reported a pointy drop in income within the June-September quarter regardless of wholesome income development as rubber and crude oil costs eroded the corporate’s margins.

The corporate reported a consolidated revenue of Rs 42 crore through the reporting interval, 77% decrease than final 12 months.

Revenue elevated 24% to Rs.2452 crore. About half of the income development was resulting from inflation, whereas the remaining got here from gross sales development, stated Anant Goenka, managing director of Ceat Ltd.

The price of supplies within the quarter climbed 54 % year-over-year for the tire maker, however it may improve costs by simply 10 to 12 %. Supplies characterize about 60 % of the expense.

Subsequently, earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) declined 25 % to Rs 220 crore whereas the EBITDA margin declined 5.8 proportion factors to 9 %. Firm margins have traditionally averaged round 11 %.

Amid low earnings expectations, Ceat Ltd inventory fell 2.72 % on BSE on Monday to shut at Rs 1,293.4. The positive factors had been introduced after market hours.

As commodity costs should not anticipated to say no anytime quickly, the corporate expects additional worth will increase over the subsequent two quarters.

“Inflation is so excessive that there isn’t any probability of absorbing it in our prices. We’ll must move it on (to the patron), ”Goenka informed ET by cellphone after the outcomes had been introduced. “It may have an effect on development, however now we have no alternative.”

Gross sales improved in all three enterprise classes – supplying automakers, the tire substitute market and exports, Goenka stated. The corporate expects margins to get well to the 10-12% vary by the final quarter of this fiscal 12 months because it progressively passes elevated prices on to shoppers.

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