Indian tyre maker MRF posts surprise drop in profit as rubber prices jump

MRF

03/05/2024 09:03

BENGALURU, May 3 (Reuters) - India's MRF  MRF.NS 
reported a surprise drop in its fourth-quarter profit on Friday,
as the tyre maker faced pressure from a spike in rubber prices.
    
    WHY IT'S IMPORTANT
    Ancilliary companies benefit from higher automobile sales
and production, as they provide parts for the vehicles. Sales of
overall vehicles in India in the fourth quarter rose more than
20% year-on-year and production climbed more than 21%, as per
industry data.
    Prices of rubber rose roughly 10%, as per analysts,
responding to higher crude oil prices. 
    Rubber is a key raw material for tyre makers, and often
takes direction from oil prices as it competes for market share
with synthetic rubber, which is made from crude oil.
    MRF's rival CEAT  CEAT.NS  also posted a surprise drop in
profit on Thursday.
    
    BY THE NUMBERS
    MRF's standalone profit from continuing operations fell 7.6%
year-on-year to 3.80 billion rupees ($45.6 million) in the three
months ended March 31.
    Analysts, on average, expected profit to climb to 5.05
billion rupees, as per LSEG data.
    Its revenue from operations rose 8.6% to 62.15 billion
rupees, while expenses climbed 9.5% to 57.99 billion rupees due
to a 7% surge in raw material costs.
    
    MARKET REACTION
    Shares of MRF fell as much as 4.5% to 127,850 rupees. The
stock was down nearly 3% prior to the results. 
    Shares of CEAT were down about 10% earlier in the day.
    
    GRAPHIC 
    
    (Figures in percentage)

    ($1 = 83.4150 Indian rupees)

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MRF stock per Jan-Mar    https://tmsnrt.rs/3y0wXWO
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 (Reporting by Varun Hebbalalu in Bengaluru; Editing by Sherry
Jacob-Phillips)
 ((varunvyas.hebbalalu@thomsonreuters.com;))