Indian tire maker Ceat more than doubles earnings

Mumbai, India – Ceat Ltd has reported a year-on-year doubling of its first quarter earnings (EBITDA), helped by improved efficiencies and product-mix.

For the three months to end of June, earnings rose 120% to INR3.84 billion (€42.2 million), on 4% higher sales of INR29.3 billion, announced the Indian tire maker.

The higher sales figures, Ceat said 26 July, reflected a mix of improved pricing and volumes, with replacement and international business “looking good”.

Earnings, according to chief financial officer (CFO) Kumar Subbiah, grew with focus on optimising operational efficiencies.

“Our improved product mix and procurement efficiencies have helped improve our gross margins,” he said.

Margins were also positively impacted by a drop in raw materials costs, Subbiah explained at an investors briefing.

“We are witnessing some kind of stability in the prices of base materials like crude oil, rubber and also currency,” the CFO reported.

This, according to Subbiah, has helped Ceat in terms of maintaining stability in the prices of raw material costs over the last six months.

While crude oil prices had moved up in the recent weeks, the Ceat official expected raw material prices to be “within the range” over the next quarter.

Breaking down the markets, CEO and managing director Arnab Banerjee said volumes grew 3% on a quarterly basis, with exports rising 11% over the final quarter.

While passenger car and two-wheeler markets saw “good growth”, commercial vehicle tire sales saw a marginal drop, according to Banerjee.

OEM volumes, he went on to say, dipped 3% quarter-on-quarter, primarily because of “portfolio changeover” in the passenger car & utility vehicle segment.

Here, Banerjee said Ceat is “exiting small rim-size vehicles and entering higher rim-size vehicles.”