- On consolidated basis, the net sales of the company for Q1FY18 stood at Rs. 32.5 billion registering a marginal de-growth of 1% on YoY basis and was almost flat from previous quarter.
- The de-growth was on account of currency, with rupee appreciation impacting European operation.
- EBIDTA excluding other income for Q1FY18 was Rs. 2.7 billion registering a margin of 8.4% against 16.4% of Q1FY17. This was primarily in account of sharp increase in raw material prices.
- Net debt at the end of the quarter continued to grow up as company invested in growth projects and was at Rs 34 billion plus, up Rs 7 billion vis-à-vis end of last quarter.
- During Q1FY18, the truck tyre sales declined by 10% and passenger car tyres sales increased by 3% on YoY basis.
- The sales for Q1FY18 was Rs. 22.8 billion making a small growth of 1% over Q1FY17. This was a combination of a volume decline of 4% made up by more than 5% increase on account of price increases and change in product mix.
- Volume of truck segment in Q1FY18 were impacted by both switching of industry from BS3 to BS4 emission norms as well as de-stocking by dealers on account of introduction of GST.
- EBIDTA excluding other income for Q1FY18 stood at Rs. 1.9 billion, a margin of 8.4% compared to 17.5% of Q1FY17. Huge decline was on account of hikes in raw material prices.
- Net debt in the stand-alone basis at the end of Q1FY18 stood at Rs. 17.7 billion, up by Rs. 5 billion from Q4FY17’s net debt of Rs. 12.7 billion.
- Raw material were up by 30% on YoY basis and up by 10% sequentially.
- TBR capacity for Q1FY18 was around 8000 tyres per day, up from 6000 tyres a day from previous quarter.
- The revenue from European operation for Q1FY18 is €107 million as compared to €110 million for Q1FY17.
- The volume growth YoY in Europe was just below 3%.
- The Dutch operations registered a growth of 3% primarily on account of volume gains in each product category.
- The Hungary operations have commenced from Q1FY18. Start-up cost of the same would have negative impact on EBIDTA for next few quarters.
- The Hungary plant is expected to reach capacity of 16000 car tyres a day by the H2FY19.
- For entire European operations for Q1FY18, the sales stood at Rs. 10 billion making a de-growth of 3.6% over Q1FY17. This was result of currency impact and also Reifencom being lower than previous year.
- From a medium term perspective, the company expect to have a 20-80 OEM replacement mix for passenger car segment. Currently it is 100% replacement.
- For Reifencom, revenue for Q1FY18 was €36 million, down from €42 million. Margins for Reifencom were 1.5% for Q1FY18.
- For Netherlands plant, the EBIDTA margin was 8.5% as compared to 14.5% of Q1FY17.
- Capacity per day at Netherlands plant is about 18000 to 19000 tyres per day.
- Prices of raw materials in Q1FY18 were as follow: Natural rubber Rs. 170/kg, Synthetic rubber Rs. 170/kg, Fabric Rs. 300/kg, Carbon black Rs. 65/kg.
- Prices are expected to decline between 5% and 9% in Q1FY18 on sequential basis and will stabilise thereon.
- The total truck tyre market in India is about 16 million, of which 45% is radial, a per annum market size of about 7.5 million.
Two Wheelers tyre segment:
- Profitability of two wheelers will continue to remain decent on account if price being under cutting.
- The significant drop in other expense is essentially because of cost control, keeping into account the pressure of raw materials.
- Depreciation expense will go up once the Chennai plant ramps-up. The goal is to take Chennai plant from 8000 tyres a day to 12000 tyres a day.
- Interest cost in Europe is close to 2% while in India it is around 8%.