Ceat earnings grow despite ‘significant" rise in raw material costs

Mumbai, India – Ceat Ltd has reported a marginal increase in first quarter earnings (EBITDA) despite higher cost of materials and an increase in “marketing expense.”

Earnings for the three months ended 30 June increased by just under 1% year-on-year to INR3.88 billion, on 8.8% higher sales of INR32 billion, largely driven by volumes.

Earnings margin, meanwhile, fell 95 basis points year-on-year to 12.2%, due to higher cost of materials and “higher other expenses led by marketing expense,” Ceat reported 19 July.

In particular, the company noted “strong growth” in the replacement and export segments across all categories during the quarter, CEO and managing director Arnab Banerjee said.

The tire maker, Banerjee added, has introduced price adjustments to mitigate pressure on margins from “significant increases in raw material costs and ocean freight.”

Furthermore, the company’s strategic focus on 'premierising' passenger car tires “has begun to yield positive results,” according to Banerjee.

“Looking ahead, we anticipate continued momentum in volume throughout second quarter and beyond,” the Ceat leader added.

Meanwhile, he said, the company is “front-loading” its previously announced capex of INR10 billion “to ensure we are well-prepared to meet rising demand."

Of the announced capex, Ceat has spent INR 2.54 billion in the first quarter and “all expansion projects are progressing as per plan,” Banerjee reported.