Apollo Tyres shares fell over 3 per cent on Thursday after its March quarter earnings missed the Street’s estimates.
Competition from cheaper Chinese imports and a slide in revenues at its European business impacted its earnings.
Apollo Tyres reported a net profit Rs 245 crore on sales of Rs 2,990 crore in its fourth quarter ending March 31, 2016. Analysts polled by NDTV Profit had estimated its net profit at Rs 284 crore on sales of Rs 3,057 crore. The tyre maker had reported a net profit of Rs 307 crore on sales of Rs 3,160 crore in the corresponding quarter of last fiscal.
“Our revenue in India, in the past financial year, has largely been impacted by the Chinese imports. The imported truck-bus radials, especially from China, occupied close to 30 per cent of the Indian replacement market for radial truck tyres, which not only impacted the domestic truck-bus radials, but also the truck-bus bias segment,” Apollo Tyres chairman Onkar S Kanwar said.
Apollo Tyres’ European business, which reported 3 per cent decline in revenue, also weighed on its overall performance.
Apollo Tyres’ EBITDA or operating profit declined to Rs 478 crore compared to Rs 516 crore in the year-ago period. Analysts had estimated its EBITDA at Rs 514 crore.
However, the company remained positive on its business prospects going ahead.
“We are confident that the team would be able to resolve the challenges very soon. With the addition of Reifen.com, we are looking at maximising on the new business vertical. We believe that there is a huge potential in further developing this business model across geographies,” Mr Kanwar said.
Apollo Tyres had acquired 100 per cent shareholding of Reifencom GmbH, one of the largest tyre distributor in Germany, on January 1, 2016.
As of 10.38 a.m., Apollo Tyres shares traded 1.24 per cent lower at Rs 151.60 apiece compared to 0.57 per cent gain in the broader Sensex.