Gurgaon, India – Apollo Tyres Ltd. suffered double-digit declines in operating and net income for the quarter ended June 30 on a slight dip in sales.
Apollo's operating income for the fiscal 2018 first quarter fell 50.3% to $43.8 million on a 1-percent dip in sales to $505.9 million. Net income slid 72% to $13.7 million.
Chairman Onkar Kanwar said in a statement that the results reflect the impact of rising raw materials prices on Apollo's operations, adding that materials' prices have increased more than 30% in the first quarter over the year-ago period.
"While rubber prices have softened to some extent, other raw materials are still on the higher side, which is likely to put our margins under pressure going forward as well," Kanwar said. "Considering this, we may need to make price corrections."
The executive added that Apollo is seeing strong demand from OEMs and growing vehicle sales in India, both on the passenger and commercial side.
The firm reported sales of $406 million in its Asia-Pacific, Middle East and Africa segment, a decrease from $402.4 million in 2016.
In Europe, sales dropped 3.6% to $159.7 million. Revenue from Apollo's "other" segments – which includes the Americas – more than doubled to $110.2 million; the figures include about $120.2 million of intersegment sales.
"The silver lining for us is the robust demand from the OEMs and the growing vehicle sales in India, both in passenger and commercial, post GST implementation," Kanwar said.
"In Europe, the increased sales reported by most of the vehicle manufacturers in the first half of the calendar year would also prove to be a positive for us going forward."