Ceat profits fall 40% despite strong revenue growth

Mumbai, India – Indian tire maker Ceat Ltd has reported a sharp year-on-year decline in second-quarter earnings, despite sales coming in 26% higher at INR47.62 billion (€446 million).

Consolidated net profit fell 39.8% year-on-year to INR1.12 billion, from INR1.86 billion, while earnings (EBITDA) margin narrowed to 9.5%, from 13.53% in the prior-year period.

Ceat attributed the dip in profitability to high raw material costs,in turn linked to suppliy-chain disruptions caused by ongoing comflict in the Middle East.

Sales growth, meanwhile, was led by premium tire segments across business units, said Arnab Banerjee, managing director and CEO.

Ceat, said Banerjee, responded to higher costs with “tighter cost controls and disciplined execution.”

“In the second half of the year, we shall look at delivering double-digit growth again, alongside further price hikes,” he added.

CFO Kumar Subbiah said the tire maker invested nearly INR4.9 billion during the quarter to expand capacity at operations with high utilisation rates.

Subbiah said he expected commodity cost pressures to persist into the third quarter, with Ceat focusing on “calibrated pricing actions” and improving its product mix.