Ceat earnings fall sharply as Iran war inflicts “significant” raw material inflation

Mumbai – Ceat Ltd has reported sharply lower first-quarter earnings despite double-digit sales growth, as higher raw material costs linked to the Middle East conflict weighed on margins.

Consolidated revenue from operations rose 22.3% year-on-year to INR43.2 billion (€391 million) in the three months ended 30 June, and increased 2.4% from the previous quarter.

Earnings (EBITDA) fell 4.3% year-on-year to INR3.7 billion, with the earnings margin declining to 8.6% from 10.9% a year earlier and 14.2% in the preceding quarter.

Net profit dropped 96.3% year-on-year to INR40 million from INR1.12 billion and was down 98.3% from INR2.44 billion in the fourth quarter of fiscal 2026.

Managing director and CEO Arnab Banerjee described the quarter as challenging, saying continued tensions in the Middle East had driven “significant raw material cost inflation.”

"We responded with calibrated price increases to partly offset the impact, while staying focused on demand and market share," he said.

Banerjee said the company nevertheless delivered 22% year-on-year revenue growth, supported by healthy demand across segments and high-capacity utilisation.

He added that Ceat would continue “to take disciplined approach to pricing” in the second quarter while focusing on profitable growth.

According to the company, volumes increased year-on-year across all business segments, while quarter-on-quarter growth was led by the replacement market.

International business recorded the ‘fastest year-on-year growth,’ and average selling prices improved both sequentially and from a year earlier following price increases in domestic and export markets.

Chief financial officer Kumar Subbiah said raw material costs rose sharply during the quarter because of the Iran war, prompting the company to implement cumulative price increases of 5%.

"We expect raw material costs to remain at elevated levels in the second quarter and hence will continue to balance our pricing actions and cost prudence to progressively mitigate the impact on our margins," he said.

Subbiah said the company invested INR3.0 billion in capital expenditure during the quarter, mainly to expand production capacity while maintaining “tight control over discretionary expenses.”