Tyre maker Goodyear India's Q1 profit rises as low rubber prices offsets weak demand

MRF

02/08/2023 13:30

BENGALURU, Aug 2 (Reuters) - Tyre manufacturer Goodyear
India  GDYR.NS  reported a higher quarterly profit as a drop in
raw material prices helped make up for its first revenue fall in
12 quarters on low demand.
    The Indian unit of U.S.-based Goodyear Tire and Rubber Co
 GT.O  said standalone profit rose 4% to 392.6 million rupees
($4.8 million) in the first quarter.
    While revenue from operations fell about 12% to 7.2 billion
rupees, that was more than offset by a roughly 13% drop in
expenses due to lower raw material prices.
    Rubber prices, a key raw material for the tyre industry,
have fallen by about 20%-25% over the last year through May,
according to HDFC Securities.
    However, Goodyear's revenue was hurt by lower sales volumes
due to subdued demand and index-based price reduction to vehicle
makers, the company said.
    The company sells tyres to both car and other passenger
vehicle makers as well as to commercial vehicle makers,
especially tractor makers, whose sales have suffered this
quarter.
    While automaker Maruti Suzuki India  MRTI.NS  reported
strong sales, the likes of Mahindra and Mahindra  MAHM.NS  and
Escorts Kubota  ESCO.NS  have reported a drop in tractor sales.
    "While the current economic environment remains challenging,
we expect the industry to bounce back, specially in the light of
good monsoon which should help stimulate the rural demand", said
Goodyear India Chairman and Managing Director Sandeep Mahajan.
    The company's larger rival CEAT  CEAT.NS , however, reported
a near 16-fold jump in profit as rubber prices fell and demand
for passenger vehicles climbed. MRF  MRF.NS  and JK Tyre
 JKIN.NS  will report results later this week.
    Goodyear India's shares ended the day nearly 3% lower, ahead
of the results, but have gained 24.5% so far this year. CEAT's
shares have surged nearly 50% in that period, while MRF has
risen 16% and JK Tyre 38%.
    Goodyear Tire and Rubber will report its quarterly results
later in the day.
 
 ($1 = 82.5440 Indian rupees)

 (Reporting by Ashish Chandra in Bengaluru; Editing by Savio
D'Souza)
 ((ashish.chandra@thomsonreuters.com; +91 7982114624;))