During the 2009-10 financial year, sales at Apollo Tyres’ operation in India, the Netherlands and South Africa increased 63% to Rs 81.2 billion (1.2 billion), with operating profit growing from Rs 4.4 billion to Rs 11.9 billion (175.0 million) and net profit leaping 364% to Rs 6.5 billion (95.6 million) – a result company chairman Onkar Kanwar described as “an impressive performance by the company."
“While India has led from the front, each of our operations has ensured a comeback after a hard year,” Kanwar continued. “As I see it, while the overall demand scenario will continue to play a positive role in the growth of the tire industry, the unsubstantiated rise in natural rubber prices of over 150% in just 14 months is going to be a dampener and a huge challenge. Also for cross-continent operations like ours currency volatility could play a critical role, especially a weaker euro.”
Indian market sales naturally accounted for the lion’s share of Apollo Tyres’ 2009-10 result. Net sales there were Rs 50.3 billion (739.7 million), 62% of the company’s global total and up 24% on the previous year. Operating profit in India grew from Rs 3.4 billion to Rs 7.9 billion (116.2 million) while net profit increased from Rs 1 billion to Rs 4.1 billion (60.3 million). Exports from India grew up nearly 27%.
“This has been the best annual performance by our Indian operations to achieve a turnover of over Rs 50 billion,” Kanwar commented. “With our Chennai plant coming on-stream and the extra capacity, I expect this to give greater traction in domestic sales and exports out of India in the current year.”
While Netherlands-based Apollo-Vredestein only accounted for 24% of Apollo’s consolidated revenues during the year, the company reports its May 2009 acquisition is a “major factor” contributing to its 63% jump in sales during the year.
A “stellar” performance in the Indian market is another reason behind this increase, the tiremaker adds. Worldwide, replacement market sales made up 83% of the total; segment-wise, truck and bus tires accounted for 47% of all revenue generated, passenger tires 33%, light truck 9%, agricultural and off-road 9%, while other segments accounted for 2% of revenues.
In India, the sharpest growth has occurred in the passenger tire segment, which has grown 36% on the previous financial year. Apollo Tyres South Africa grew 18% by volume in the domestic South African market, registering an overall growth of 13%, while Apollo Vredestein Banden BV benefited from a colder than average European winter – following what Apollo describes as a “slow year,” sales of winter tires grew 23%. (Tyres & Accessories)
