MRF quarterly profit falls as raw material costs pressure margins
India's tyre sector is contending with elevated input costs even as vehicle-related demand stays firm in the September quarter. MRF reports that higher raw material expenses outweigh stronger tyre sales, leading to a sharp drop in quarterly profit and a rise in total costs.
Highlights
- MRF's net profit for the quarter ended September 30 fell nearly 28% to 3.69 billion rupees, driven by surging raw material costs.
- Revenue from operations rose almost 18% to 85.24 billion rupees, while materials costs jumped about 44%, increasing total expenses over 22%.
- MRF declared an interim dividend of three rupees per share, as resilient tyre demand was offset by industry-wide margin pressures from high natural rubber prices.
September-quarter earnings and cost pressures
As reported by Reuters, MRF says profit for the quarter ended September 30 falls nearly 28% to 3.69 billion rupees from 5.12 billion rupees a year earlier, as rising raw material costs more than offset resilient tyre demand.Revenue from operations rises almost 18% to 85.24 billion rupees, while total expenses increase more than 22%. The company says cost of materials consumed jumps about 44% during the quarter, with material costs linked in part to the war in the Middle East.
MRF also declares an interim dividend of three rupees per share for the financial year ending March 31.
Broader pressure across Indian tyre makers
Demand for tyres remains resilient in the July-September quarter, helped by steady dispatches from automakers. But Indian tyre makers face higher raw material costs as supply shortages and adverse weather in key producing countries keep natural rubber prices elevated, pushing companies to raise prices.MRF, which makes tyres certified by Suzuki for use in its superbikes, is not alone in facing this margin pressure. Peers JK Tyre and CEAT also report lower second-quarter earnings as higher raw material prices squeeze profitability.
Earlier, we reported that the WTO expects Middle East exports to fall 17% in 2024 as war-related disruptions reshape supply chains.
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