Ceat tanks 6% as high crude, rubber prices hit Q4 margins

NEW DELHI: Shares of Ceat plummeted 5.8 per cent in early trade Friday as the tyre manufacturer reported an 84 per cent decline in consolidated net profit to Rs 25 crore in the fourth quarter of the previous financial year.

The company had posted a net profit of Rs 153 crore in the January-March quarter of 2020-21.

Ceat’s stock fell to a low of Rs 1,027.50 as against its previous close of Rs 1,090.25 on the BSE.

The tyre maker’s profits nearly halved during the March quarter as higher crude and rubber prices continued to weigh on the company’s margins.

Consolidated revenue during the quarter improved by 13 per cent to Rs 2,592 crore backed by higher prices and sales.

Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 28 per cent year-on-year to Rs 187 crore. Meanwhile, the EBITDA margin shrank by 418 basis points to 7.2 per cent.

Anant Goenka, the managing director of Ceat, was quoted as saying in reports that there was a recovery in the market, particularly in the replacement and commercial tyre categories. The international business too performed well and the company expects it to drive growth in the coming year.

“Margins, however, continue to be under pressure due to rising commodity prices and other inflationary costs,” Goenka said in a press statement.

For the complete fiscal year FY22, Ceat reported a consolidated top line of Rs 9,363 crore and a profit of Rs 71 crore. The EBITDA for the previous financial year as a whole, came in at Rs 739 crore.