Expect positive change in exports from Q1: CEAT

A senior company executive said it is now poised for further growth as exports are expected to pick up again on softening raw material prices and pick-up in demand for passenger cars, trucks and buses.

The consolidated net profit figures registered a growth of 428% due to lower raw material costs. operating revenue reached 2,875 crore in Q4FY23 as compared to Rs. 2,592 crore in the year-ago quarter. Ebitda margin also expanded to 13% in Q4, up 600 basis points from a year ago and 400 bps sequentially.

“Exports faced a slight challenge during the year mainly due to macroeconomic headwinds. Most developed nations were going through some degree of recession, and in developing countries, especially around India, depreciating currencies severely affected demand. Hence, there was some slowdown in international trade,” said Anant Goenka, vice-chairman of CEAT.

Goenka had recently stepped down as MD and chief executive of the firm to take up a wider role in the RPG Group’s businesses.

“The worst is already over for exports, I am quite optimistic. We are investing in the specialty tire business, which is the off-highway tire segment, which we sell largely in Europe and the US markets.”

Good shopping is being seen there. It should see some positive growth from the first quarter itself. In fact, minor positive changes are being seen in other markets as well.

We are making significant investments in Europe for the passenger segment and trucks. On both sides we are coming with a relatively low base.

And the only way forward is to grow in both the segments. In the US, we are developing our products, and are about a year away from launching the products.”

Europe and the US together account for about 45% of the company’s export revenue.

“Some of the things that held us in good stead at CEAT this quarter was the investment in capabilities over the last 3-4 years. The capacities are now well utilized and as a result we are getting good operating profit. We still have 15-20% upside in terms of capacity.

To that extent, we can see more growth with less or limited capex. Raw material cost has fallen from the high level of last year,” he said.

“About 15% of the raw material basket for us is crude and crude derivative products, and about 350–400% is natural rubber. We have seen price reduction in both which has also helped margins. So, apart from growth, efficiencies improving operating leverage, we have got some positive headwinds in terms of raw material pricing”, Goenka pointed out. Peppermint,

During the fourth quarter of the year, CEAT’s overall volume grew 7% quarter over quarter and 6% on an annualized basis. Replacement volumes grew by 5% QoQ and 5% YoY, while OEM volumes grew by 8% QoQ and 20% YoY. However, export volumes decreased by 15% QoQ and 11% YoY. The TBR (Truck and Bus Radial) segment posted double-digit QoQ growth, and farm and specialty had healthy momentum followed by two-wheeler (2W) strong growth QOQ, while PCR (Passenger Car Radial) demand moderated.