MRF posts decline in profit as rubber prices surge
BENGALURU: MRF on Friday posted decline in its fourth-quarter on Friday, primarily due to the surge in rubber prices . MRF's standalone profit from continuing operations fell 7.6% year-on-year (YoY) to Rs 379.6 crore from Rs 410.7 crore.
However, its revenue increased by 8.6 % to Rs 6,215.1 crore vs Rs 5,725.4 crore (YoY) while EBITDA went up by 5% to Rs 885.7 crore from Rs 843.1 crore.
However, its revenue increased by 8.6 % to Rs 6,215.1 crore vs Rs 5,725.4 crore (YoY) while EBITDA went up by 5% to Rs 885.7 crore from Rs 843.1 crore.
Analysts, on average, expected profit to climb to Rs 5o5 crore, as per LSEG data.
Why it's important
Ancilliary companies benefit from higher automobile sales and production, as they provide parts for the vehicles. Sales of overall vehicles in India in the fourth quarter rose more than 20% year-on-year and production climbed more than 21%, as per industry data.
Prices of rubber rose roughly 10%, as per analysts, responding to higher crude oil prices.
Rubber is a key raw material for tyre makers, and often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
Why it's important
Ancilliary companies benefit from higher automobile sales and production, as they provide parts for the vehicles. Sales of overall vehicles in India in the fourth quarter rose more than 20% year-on-year and production climbed more than 21%, as per industry data.
Prices of rubber rose roughly 10%, as per analysts, responding to higher crude oil prices.
Rubber is a key raw material for tyre makers, and often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
MRF's rival CEAT also posted a surprise drop in profit on Thursday.
Market reaction
Shares of MRF fell as much as 4.5% to 127,850 rupees. The stock was down nearly 3% prior to the results.
Shares of CEAT were down about 10% earlier in the day.
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