Apollo Tyres (APOLLOTYRE) Q4 97/98 earnings summary

Executive summary

• FY 1997-98 net profit rose to Rs.40.68 crore from Rs.36.32 crore despite lower sales and higher tax; manufacturing reached a record 114,000 MT.

• Profitability improved through manufacturing and cost efficiencies, while domestic market share reached an all-time high of 20%.

Financial highlights

• Sales and other income were Rs.1,369.24 crore vs Rs.1,426.91 crore; sales from operations were Rs.1,365.19 crore vs Rs.1,413.70 crore.

• Gross profit before depreciation rose 35.5% to Rs.83.9 crore from Rs.61.9 crore; profit before prior-period expenses and tax was Rs.61.87 crore vs Rs.41.93 crore.

• Net profit was Rs.40.68 crore after Rs.13.76 crore tax provision and Rs.7.43 crore prior-period expenses; prior-year tax provision was Rs.5.61 crore.

• Recommended equity dividend was 40%; EPS was Rs.13.54.

• Operating cash flow was Rs.36.98 crore vs Rs.33.13 crore; investing activities used Rs.21.34 crore vs Rs.31.12 crore.

Outlook and guidance

• Expansion plans for 1998-2000 carry planned capital outlay of Rs.395 crore; funding is envisaged through rights/preferential issues, borrowings and internal accruals.

• Focus is shifting toward the replacement market as analysts expect the auto-industry recession to continue and the OE market slows.

• Supply-chain optimisation, product-mix changes, balancing expansions at existing sites and new projects at strategic locations are planned.

• New tyre plant proposed in Punjab or Andhra Pradesh; Board-approved plan also includes Rs.210 crore of 1998-2000 capex and a Rs.125 crore new-plant outlay.

• R&D priorities include commercialising truck/bus and LCV radials, developing higher-speed and lower-aspect-ratio tyres, and absorbing advanced manufacturing and testing technology.