GURGAON, India (Feb. 11, 2015) — Apollo Tyres Ltd. suffered double-digit drops in net income and sales in the quarter ended Dec. 31 as the company absorbed costs associated with a restructuring of its South African operations.
Third quarter net income fell 18.5 percent to $29.5 million as sales slipped 11.1 percent to $497.9 million. Operating profit was down slightly to $80.9 million, or 17.3 percent of sales.
For the nine-month period, the Gurgaon-based tire maker reported net income of $110.2 million and sales of $1.58 billion, drops of 0.1 and 4.7 percent, respectively. Operating income was up 6.5 percent to $242.2 million.
Apollo attributed the decline to costs related to its “rescue plan” for South Africa, which calls for the Durban, South Africa, plant to be shut. The firm said all dues to bankers and externals suppliers have been cleared, and the payouts due to the affected employees were accounted for in the third quarter.
“We have maintained our profit margins, despite accounting for all charges related to the rescue plan of our South African subsidiary,” Apollo Chairman Onkar Kanwar said in a statement. “I am pleased to inform that we have been able to secure the best value for all the stakeholders.”
The chairman added that the uncompetitive cost structure in the South African market along with continuous labor unrest and other related issues prompted the decision to close the Durban facility.
The board also approved the appointment of Raj Banerji as chief financial officer of the company, taking over from Sunam Sarkar, who was designated as president and chief business officer in November 2014.