Ceat Q1 muted, cost control limit margin contraction

Ceat, an RPG Group company, clocked a consolidated net loss of Rs 35 crore in Q1FY2021 as against a net profit of Rs 82.2 crore in Q1FY2020. On a consolidated basis, the company’s revenue for Q1 stood at Rs 1,120 crore down from Rs 1,752.10 crore a year ago. The EBITDA margins bettered analysts’ expectations on the back of cost control measures and contracted by only 40 basis points from a year ago period and stood at 9.4%.

Commenting on the results as well as the outlook for the business, Anant Goenka, managing director, Ceat said, “Our performance in the quarter has been resilient and reflective of our agile operations, efficient planning, and purpose-driven execution. Our primary area of focus over the last quarter was the health and safety of our people, our customers, partners and the community.  We closely monitored our cash flows and costs and were able to see positive results. Looking ahead, we see a path for recovery backed by easing of restrictions and an uptick in the market. We have resumed operations at all our factories and are making concerted efforts towards ensuring we are ready as the demand picks up, while successfully transitioning into a new work environment.”

The company has resumed manufacturing in most of its facilities in a phased manner and is currently looking at scaling up operations. Outlining the strategy going forward, Kumar Subbiah, CFO of CEAT said, “This has been an unprecedented quarter. There was a huge focus on cashflow through maximisation of cash generation and judicious utilisation of cash during the quarter supported by well-planned actions in the areas of working capital and capex. We kept strong controls on our costs that has helped in delivering reasonable margins despite a drop in revenues. We have managed to contain our net debt levels with adequate liquidity to meet our financial obligations despite lower level of operations and have ended the quarter with healthy leverage ratios.”