The second-quarter profit forecast for Indian tyre producer MRF Ltd was missed on Tuesday due to rising input prices and supply chain difficulties, which offset an increase in revenue.
Standalone net profit from continuing operations dropped from 1.83 billion rupees a year earlier to 1.24 billion rupees ($15.14 million) for the three months ended September 30, the company reported in an exchange filing.
According to Refinitiv IBES data, analysts had projected a profit of 1.85 billion rupees on average.
The production of tyres has been challenged by high input costs as rising worldwide inflation increased the cost of basic materials like rubber.
MRF Chairman K.M. Mammen had stated in July that the company and the industry as a whole suffered from challenges with the supply of raw materials brought on by Russia’s invasion of Ukraine and poor demand as a result of rising gasoline prices.
Petrochemicals, a crucial ingredient in the production of tyres, saw a dramatic rise in price as a result of the Russia-Ukraine conflict.
Input expenses at MRF increased by 8.1% to 41.13 billion rupees.
The expansion of rubber plantations in India’s northeastern and eastern areas will cost 11 billion rupees, according to Indian tyre businesses, including MRF, who announced the investment on Friday.
Operational revenue increased 18.4% to 57.19 billion rupees.
Competitors of MRF, CEAT Ltd and JK Tyre & Industries Ltd, also announced significant drops in their quarterly profits over the last week.