Apollo sales rise 17% as raw-material costs pressure margins

Gurugram, India – Apollo Tyres has reported a 17% year-on-year increase in second-quarter revenue, supported by growth in India.

Consolidated revenue reached INR79.7 billion (€772 million) for the three months ended 30 Sept, compared with INR68.31 billion a year earlier, the tire maker announced 4 Nov.

Operating profit fell 15.8% to INR8.55 billion, while net profit increased 13% to INR2.9 billion from INR2.58 billion.

The results included an exceptional pre-tax restructuring charge of INR260 million.

"Growth across categories in India has been supported by our sustained rural expansion efforts and strategic association with cricket," said Apollo chairman Onkar Kanwar.

He added that new commercial vehicle tire products had contributed to the quarter's performance.

"At the same time, geopolitical tensions in West Asia remain a headwind, resulting in elevated input costs and supply chain disruptions."

Speaking during a 5 Nov earnings call, newly appointed CFO Ravi Kumar Shingari said Indian operations recorded a 26% year-on-year increase in revenue to INR59 billion.

Growth was broad-based across replacement and original equipment (OE) channels, with higher volumes and selling prices contributing almost equally to the increase.

However, Indian earnings (EBITDA) margin declined to 11.1% from 15.3% a year earlier, reflecting sharply higher raw-material costs.

According to Shingari, Apollo's raw-material basket increased 25% year-on-year during the quarter.

Natural rubber costs rose around 25–26%, while crude oil-derived materials increased by 28–35%.

In response, Apollo implemented price increases across its Indian tire portfolio, including cumulative increases of 13–15% in various categories by the end of October.

Further price increases, Shingari said, could follow, depending on raw-material costs and market conditions.

European operations

Meanwhile, Apollo's European revenue fell 12% year-on-year to €157 million, reflecting weak demand and supply disruptions following the closure of its Enschede tire plant in the Netherlands.

The company reported a European earnings margin of 10.3% for the quarter.

Shingari said the decline was particularly pronounced in truck and agricultural tires, where supplies had been affected by the reorganisation of manufacturing operations.

The company is transferring truck tire production from Hungary to India, while reorganising supplies following the Enschede closure.

According to the CFO, production at Enschede ceased at the end of the first quarter of FY2027, with dismantling and equipment disposal expected to take a further two to three quarters.

"As far as the operations are concerned, by and large, we should be ready with the supply, with the manufacturing facilities in the next two quarters," Shingari told analysts.

He said Apollo expected its European operations to be largely stable from the next financial year, following the completion of manufacturing and supply-chain changes.

Despite the wider decline, Apollo's European passenger car and light truck (PC/LT) tire business recorded 5% year-on-year volume growth.

The CFO also reported volume growth of more than 50% for Apollo-branded PC/LT tires in Europe.

For the first half of FY2027, group revenue increased 15% year-on-year to INR153.66 billion.

Operating profit declined 8.8% to INR17.2 billion, while net profit increased 136% to INR6.41 billion.