Tyre maker CEAT reported a 39.8% year-on-year (YoY) decline in consolidated net profit to ₹112 crore for the second quarter, compared with ₹186 crore in the year-ago period, as elevated raw material costs weighed on profitability despite strong revenue growth.
Revenue from operations rose 26.2% YoY to ₹4,762 crore from ₹3,773 crore. However, earnings before interest, tax, depreciation and amortisation (EBITDA) fell 9.1% to ₹457 crore from ₹503 crore a year earlier. The EBITDA margin contracted to 9.6% from 13.3% in the corresponding quarter last year.
The company also incurred a one-time cost of ₹13 crore towards voluntary retirement schemes during the quarter.
CEAT Managing Director and Chief Executive Officer Arnab Banerjee said the company sustained its revenue momentum, driven by growth in premium segments across business units, even as geopolitical tensions kept raw material costs elevated.
In Q2, Ceat delivered a strong double-digit revenue growth of 26% Y-o-Y, continuing the momentum of the past several quarters, led by growth in premium segments across BUs.
The West Asia crisis kept raw material costs high and did present challenges, but we responded with tighter cost controls and disciplined executionARNAB BANERJEE, MD AND CEO, CEAT
Looking ahead, Banerjee said the company would seek to sustain growth in the second half of the financial year, alongside further price increases.
In the second half of the year, we shall look at delivering double digit growth again, alongside further price hikes MD AND CEO ADDED
On a standalone basis, CEAT reported revenue of ₹4,548 crore, up 23% year-on-year. Its EBITDA margin stood at 10.14%, while net profit came in at ₹164 crore.
Chief Financial Officer Kumar Subbiah said the continuing conflict in West Asia had kept commodity costs elevated and that the company would focus on pricing and product mix to manage the pressure.
The company will remain focused on calibrated pricing actions and improving our product mix, with moderate price increases, he added.
He also flagged higher capital expenditure and dividend payouts as factors behind an increase in debt during the quarter. CEAT spent close to ₹490 crore on capital expenditure, primarily to expand capacity in areas where utilisation has been high.
Debt increased during the quarter, largely due to higher capital expenditure of close to ₹490 crore to increase our capacities where utilisation has been high and dividend payouts CHIEF FINANCIAL OFFICER KUMAR SUBBIAH
The company expects cost pressures to continue into the third quarter as commodity prices remain elevated, while maintaining a focus on financial discipline and capacity expansion to meet demand.
Ahead of the earnings announcement, CEAT shares closed 1.89% higher at ₹3,351 on the NSE on Wednesday, gaining ₹62.15.