CEAT reported a 40% drop in Q2 net profit to Rs 112 crore as high input costs hit margins. Revenue rose 26.2% to Rs 4,762 crore. CFO Kumar Subbiah said, "Cost pressures are expected to persist into the December quarter as commodity prices remain elevated." The company plans price increases.
Revenue from operations rose 26.2% to ₹4,762 crore from ₹3,773 crore in the year-ago quarter. However, earnings before interest, taxes, depreciation and amortisation (EBITDA) declined 9.1% to ₹457 crore from ₹503 crore, while the EBITDA margin contracted to 9.6% from 13.3%.
Arnab Banerjee, MD, CEO said, "The company sustained double-digit revenue growth, supported by momentum in premium segments across its business units. However, elevated raw material costs due to the West Asia crisis continued to pose challenges. The company responded through tighter cost controls and disciplined execution."
CEAT expects to sustain its growth momentum in the second half of the financial year. Banerjee said the company would aim to deliver double-digit growth again, alongside further price increases.
Kumar Subbiah, CFO, CEAT said, Commodity costs remained high because of the continuing conflict in West Asia. The company will focus on calibrated pricing actions and improving its product mix, while implementing moderate price increases."
"Cost pressures are expected to persist into the December quarter as commodity prices remain elevated" Subbiah added. The company will maintain fiscal discipline while investing to meet demand and support profitable growth.
CEAT's revenue growth comes as it continues to invest in capacity expansion. Subbiah said debt increased during the September quarter, largely due to capital expenditure of close to ₹490 crore to expand capacities where utilisation has been high, as well as dividend payouts.