Tyre manufacturer Ceat ’s second quarter net profit plunged 63% year-on-year to Rs 5.61 crore. Ceat said exports surged 90% during the quarter, and the full impact of the price hike taken in the first quarter was also realized in July-September. However, the gains were offset by a sharp rise in raw material costs and higher interest.
In the July-September quarter, Ceat’s net sales were up 33% from a year ago to Rs 1,104.70 crore.
Input costs have soared over the last one year, hurting profits of tyre makers. Ceat’s raw material costs during the second quarter jumped 28.3% from a year ago to Rs 821.20 crore.
Interest expense during the quarter more than doubled to Rs 35.93 crore. Depreciation was also higher at Rs 17.26 crore, compared with Rs 8.05 crore a year ago.
Raw material costs, though, have started declining sequentially; they were down 2% in July-September, compared with April-June and that is providing some relief, Ceat said. It made operating profit before tax of Rs 8 crore in the second quarter, compared with operating loss of Rs 59.3 crore in the first quarter.
Anant Goenka, the deputy managing director of Ceat said coming quarters "looked promising" and expects profits to improve, with softer raw material prices leading to better margins, sharp export growth and aggressive ramp-up of its Halol plant.
Ceat shares closed almost flat at Rs 74.75 on NSE on Wednesday.
Source: www.moneycontrol.com
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