Goodyear India Posts Deflated Q4CY12 Results

Goodyear India (GIL), a tyre manufacturing company for the passenger and farm segment, announced its Q4CY12 results post market hours on 27 February, 2013. The numbers were quite disappointing, with the company's topline declining by 2.88% to Rs 383.77 crore in the quarter ended December 2012 on a YoY basis due to a decline in the sales of tyres. The Other Income grew by Rs 4.89 crore in the similar period.

During the quarter, the company's total expenses remained the same as the previous year’s expenses at Rs 366.27 crore. Though the raw material cost declined by 2%, there was an increase in ther Expenses by Rs 8.97 crore. This led to a decline in the operating profits, which fell by 39.7% to Rs 17.5 crore.

Moreover, GIL's margins have also been impacted due to an increase in Other Expenses. The operating profit margin declined by 278 basis points to 4.56% and the net profit margin declined by 93 basis points to 4.2%.

Apart from this, in Q4CY12, the company’s net profit declined by 20.68% to Rs 16.11 crore from Rs 20.13 crore in Q4CY11. The bottomline would have impacted more, but as the finance costs and tax expenses saw a decline in the similar period by 27.74% and 20.26% respectively, the net profit was impacted less than the operating profit.

GIL has reported lower sales due to a slowdown in the automotive sector (especially in the passenger car segment) and economic headwinds. However, the economy is expected to grow in the coming period and the customers’ sentiments are also changing over time. It has also maintained its status as a debt-free company for the last three years. All these will help GIL to boost its sales and enhance its margins in near future. Investors are advised to wait till such time as the company’s financial position improves before investing in this company.