Apollo fiscal results mixed

GARGAON, India (May 13, 2015) — Apollo Tyres Ltd. reported a slight operating income gain for the fiscal year ended March 31 on 4.4-percent lower sales.

The Indian tire maker attributed the lower sales to the combined effects of a depreciating euro and the loss of sales volume from the firm's Dunlop-related activities in Africa, divested in late 2013 to Sumitomo Rubber Industries Ltd.

The company's operating income rose 0.5 percent to $32.5 million on sales of $2.08 billion, yielding an operating ratio of 15.6 percent. Net income fell 2 percent to $16 million.

Apollo Chairman Onkar Kanwar said the lost sales revenue from the African divestiture offset “healthy volume growth” in its European car tire business and nearly 30-percent volume growth in the truck-bus radial segment in India.

Nonetheless, he said, the company's effort toward market expansion outside India resulted in export growth of more than 20 percent from India.

Looking at fiscal 2016, Mr. Kanwar cautioned that a recent increase in import duty on natural rubber to 25 percent from 20 “will be a challenge going forward.

“This change in duty is likely to result in further increase in import of cheap tires into the country, which can be imported at 10-percent duty and will hinder the growth of capacity investments by the domestic tire industry, in addition to making us uncompetitive.”

In the fourth quarter, Apollo's operating and net income grew 6.3 and 9.2 percent, respectively, on 0.2-percent higher sales.

Taking the African divestiture into account, Apollo's geographic breakdown now stands at 65 percent India, 28 percent Europe and 7 percent other markets.

Apollo recently broke ground on its first greenfield facility outside India — in Hungary — where it expects to start production of car and van tires in early 2017.