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MRF: 2Q net declines 74% YoY

May 2, 2001

MRF Ltd, India's largest tyre manufacturer has reported dismal results for 2QFY01. The company's net profit has registered a decline of 74% YoY to Rs 43 m for 2QFY01 as compared to Rs 166.5 m for 2QFY00. Its turnover declined by 22% during this period due to the ongoing slowdown in the automobile sector.

(Rs m) 2QFY00 2QFY01 Change
Sales 5,508 4,299 -22.0%
Other income 14 5  
Interest 162 150 -7.3%
Depreciation 264 233 -11.8%
Profit after Tax/(Loss) 166.5 42.8 -74.3%
Net profit margin (%) 3.0% 1.0%  
No. of Shares (eoy) (m) 4.2 4.2  
Diluted number of shares 4.2 4.2  
Diluted Earnings per share* 157.1 40.4  
*(annualised)      

Due to recasting of the previous year's figures as a result of revised accounting standards for inventory valuation, 2QFY00 is now lower by Rs 42.3m to Rs 166.5 m as compared to Rs 208.8 m declared earlier on by the company. Hence the 2QFY01 decline in net would have been even steeper had it not been for this revision in inventory valuation.

The recession across all segments in the automobile industry has resulted in lower demand from the tyre industry. MRF Ltd, India's largest radial manufacturer as a result too has reported a lower turnover growth. Raw material consumption as a percentage of sales went upto 48.4% in 2QFY01 as compared to 46% in the corresponding period of the previous year mainly due to higher prices of carbon black, which is a major raw material. The company's margins as a result were under pressure.

The company has plans of increasing its exports in the current year so as to beat the domestic automobile slowdown.

On the current price of Rs 692, MRF is trading at 4.6x FY00 EPS of Rs 151. It is trading close to its 52 week low of Rs 683.


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