MRF's second quarter net profit falls to ₹369 crore due to high raw material costs

According to a report by Business Standard, tyre manufacturer MRF has recorded a decline in its second-quarter profits due to rising raw material costs. According to financial results released on Tuesday, the company's net profit for the quarter ended September 30 fell by approximately 28 per cent to ₹369 crore ($39.29 million), compared to ₹512 crore in the same period last year. However, a report by The Hindu stated that the consolidated net profit fell by 26.6 per cent to ₹386.99 crore.

As per the Business Standard report, tyre demand remained steady in the July-September quarter due to consistent dispatches from automakers. According to The Hindu, the company recorded strong double-digit sales growth, supported by sustained demand from both Original Equipment (OE) and replacement segments.

According to the Business Standard report, revenue from operations increased by nearly 18 per cent to ₹8,524 crore, while total expenses rose by more than 22 per cent due to increased costs of materials related to the ongoing war in the Middle East. The cost of materials consumed increased by approximately 44 per cent in this quarter. According to The Hindu, consolidated total revenue increased by 17.4 per cent to ₹8,791.58 crore, while the cost of materials consumed increased by 43.1 per cent to ₹6,552.57 crore and total expenses increased by 21.8 per cent to ₹8,269.77 crore. According to The Hindu, Profit Before Tax (PBT) fell by 25.5 per cent to ₹521.81 crore and Earnings Per Share (EPS) fell from ₹1,243.60 to ₹912.46.

According to the Business Standard report, natural rubber prices remained high due to supply shortages in key producing countries and adverse weather conditions, forcing Indian tyre manufacturers to hike prices. Peer companies such as JK Tyre and Ceat also reported lower second-quarter earnings due to high raw material prices. MRF has declared an interim dividend of ₹3 per share for the financial year ending March 31.

According to The Hindu, the company stated that the sharp increase in raw material prices due to global uncertainties has had an adverse impact on profitability, although price hikes and cost-cutting measures have helped ease the pressure. The company had previously stated that it expects volatility in commodity markets and that raw material and logistics costs will remain high.

For the six months ended September 30, according to The Hindu, consolidated revenue increased to ₹17,402.14 crore and net profit fell to ₹882.34 crore.