Apollo targets earnings growth amid weak full year results

Gurugram, India – Apollo Tyres has launched “targeted strategies” to address its underperformance over the past few quarters, according to chairman Onkar Kanwar.

In a 15 May full-year financial report, Kanwar said Apollo acknowledged that its performance over the past few quarters “has not met industry benchmarks or our own expectations.”

After “a thorough internal review,” the Apollo boss said the group had identified the key challenges that contributed to this underperformance.

“With targeted strategies now in place to address these issues, we are confident in our ability to deliver stronger results in the coming quarters,” he said without providing further detail.

For the fiscal year ended 31 March, Apollo reported a 20% year-over-year decline in operating profit to INR35.7 billion (€393 million), on 3% higher sales of INR261 billion.

Speaking during a 15 May earnings call, managing director Neeraj Kanwar said the tire maker had taken a range of initiatives to address the subpar results.

“Our replacement market remains robust but where we have faltered is in OEMs,” he explained during the call.

Here, Kanwar explained, Apollo has intentionally withdrawn from offering some of the sizes both in passenger car and truck & bus tires, and has thereby seen a decline in volumes.

For instance, the truck trailer OEM demand is high, but Apollo has chosen not to supply the tires as they are “low quality products.”

With other truck products in the pipeline, Kanwar expects Apollo to increase volumes in the near future.

Another 'faltering' area, according to Kanwar, has been exports, which Kanwar said Apollo is aiming to improve. 

“All focus right now is on trying to increase our share both in the OEM and exports segments,” said the Apollo leader, adding that with strong replacement performance, the first quarter of the new fiscal year looks stronger already.