Ceat posts earnings dip on higher input costs, weaker mix

Mumbai, India – Ceat Ltd has seen its third quarter earnings decline year-on-year, due largely to higher costs of raw materials.

Earnings (EBITDA) for the three months to end of December 2023 fell 7.8% to INR4.25 billion (€47 million).

The reverse came despite an 8.7% year-on-year increase in third quarter sales, to INR29.6 billion, the Indian tire maker reported 24 Jan.

Earnings margin stood at 14.4%, a contraction of 588 bps compared to the same quarter the year before.

Gross margins, according to Ceat, were impacted by an increase in raw materials costs and mix effects.

In terms of sales, the tire maker noted “healthy volume growth” across the replacement and OEM segments, as exports ‘continued to recover’.

The quarter, however, is “seasonally weak” compared to the second quarter, and saw a particular decline in OEM volumes, Ceat noted.

Cost optimisation measures helped to mitigate the impact on profitability, according to the Mumbai-based group.

Replacement and international business reflected strong growth year-on-year, according to Arnab Banerjee, managing director & CEO of Ceat.

While margins for the quarter were “healthy”, Banerjee said the company witnessed a drop during the period primarily due to an increase in input costs.

“With stronger growth in premium segments in domestic market and recovery in international markets, we expect a stronger growth in the forthcoming quarters,” he added.