JK Tyre Q2 PAT slides 35% to Rs 109 cr

The company's consolidated net profit dropped 35.4% to Rs 108.91 crore on 5.6% increase in net sales to Rs 2,274.84 crore in Q2 September 2020 over Q2 September 2019.

Consolidated profit before tax (PBT) soared 674% to Rs 167.40 crore in Q2 September 2020 as against Rs 21.63 crore in Q2 September 2019. Current tax expense for the quarter tumbled 65.26% to Rs 6.18 crore as against Rs 17.79 crore in Q2 September 2019. The Q2 result was declared after market hours yesterday, 21 October 2020.

The EBITDA for the quarter stood at Rs 368 crore. Commenting on the Q2 performance, Dr Raghupati Singhania, the chairman and managing director (MD) of the company, stated that: "JK Tyre achieved higher sales on the back of economic recovery, more so in the automotive sector, which has taken place during the quarter. The company was well positioned to take benefit of this emerging opportunity, and as a matter of fact, it could achieve healthy sales in the replacement market, doing better than the industry. The renewed thrust on exports resulted in higher export sales of Rs 337 crore during the quarter."

"Profitability improved significantly due to aggressive cost cutting, more particularly fixed costs. The company could achieve savings in interest costs due to its ability to reduce its working capital requirements."

Dr Singhania added that company's subsidiaries i.e., Cavendish Industries (CIL) and JK Tornel (Mexico), have contributed significantly to both, improved sales and profitability.

The firm had earlier said that its subsidiary, CIL recorded a net revenue of Rs 667 and profit before tax (PBT) of Rs 53 crore for the quarter. CIL's EBIDTA stood at Rs 114 crore, which translated in an operating margin of 17%. CIL recorded its highest ever performance on back of higher capacity utilization of 84% with significant increase in truck/bus radial and 2-3-wheeler tyre sales. The aggressive focus on cost reduction particularly fixed costs and overall operating parameters helped improve its cash flows.

Dr Singhania said it expects the Indian economy to sustain its growth momentum in the coming quarters as well.

Meanwhile, the board has appointed Anshuman Singhania as managing director (MD) of JK Tyre & Industries effective 21 October 2020. Singhania joined the company as an executive and over the years has been deeply involved in various activities of the company in different positions, current being Dy. managing director.

Shares of JK Tyre & Industries rallied 6.68% to Rs 64.65 on BSE.

JK Tyre & Industries manufactures a wide range of automobile tires, tubes and flaps. The company also operates a chain of tire outlets across the country which sell the company's tires in addition to providing a range of automotive services, including wheel alignment and tire changing.

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