CIE Automotive , a leading auto component manufacturer, has reported a mixed set of results for the second quarter, with its India operations showing growth while European business continues to face challenges. The company remains optimistic about its performance in the second half of the year, particularly in the Indian market.

India Operations Show Resilience

CIE Automotive's domestic business recorded sales of INR 14.50 billion in Q2, representing a 7% year-on-year growth. The company's EBITDA margin in India stood at a healthy 17.50%, despite some product mix issues. This performance outpaced the weighted average market growth, with the light vehicle and two-wheeler segments experiencing sluggish growth below 5%, while tractors and trucks recorded healthy growth.

European Operations Stabilizing

The company's European operations showed signs of stabilization, with sales reaching INR 8.30 billion, down 1% year-on-year. However, this marks an improvement from the double-digit declines seen in previous quarters. The EBITDA margin in Europe was 12.50%, which includes one-time restructuring costs at the Metalcastello facility. Excluding these costs, the margin would have been closer to 15%.

Consolidated Performance

On a consolidated basis, CIE Automotive reported sales of INR 23.00 billion for Q2, a 4% growth over the same period last year. The consolidated EBITDA margin stood at 15.70%.

New Orders and Future Outlook

The company secured new orders worth INR 6.00 billion in the first half, indicating a healthy order book. Management expects better performance in the second half of the year, driven by festive season demand in India and potential market improvements.

Strategic Initiatives

CIE Automotive is focusing on new product development and expanding its customer base. The company has developed new products such as complex crankshafts for two-wheelers, common rail systems, and specialized gears for electric vehicles. These initiatives are expected to help the company maintain its competitive edge and drive future growth.

Restructuring in Europe

To address the challenging market conditions in Europe, the company has undertaken restructuring activities, particularly at its Metalcastello facility. The workforce at Metalcastello has been reduced from 200 to 170 employees, which is expected to improve operational efficiency and align with current market demands.

Capacity Utilization and Future Investments

The company reported a capacity utilization of around 75-80% in India, indicating room for growth without significant capital expenditure. In Europe, however, there is significant excess capacity due to market conditions. CIE Automotive plans to focus its investments on specific machinery and technologies to meet customer demands efficiently.

CEO Ander Arenaza Alvarez commented, "We are pleased with the resilience shown by our Indian operations and the signs of stabilization in our European business. While challenges persist, particularly in Europe, we are taking proactive measures to improve efficiency and capitalize on growth opportunities. We remain confident in our ability to navigate the current market conditions and deliver value to our stakeholders."

As CIE Automotive looks ahead, the company remains cautiously optimistic about its performance in the second half, particularly in the Indian market. The management's focus on new product development, operational efficiency, and strategic market positioning is expected to drive growth and maintain the company's competitive edge in the automotive component sector.

CIE Automotive India Limited, a leading automotive component manufacturer, has announced its financial results for the second quarter and first half, showcasing resilience in the face of market challenges.

Q2 Highlights

The company reported consolidated revenue from operations of Rs. 23,690.04 crore for Q2, marking a 3.30% increase compared to the same quarter last year. The profit after tax for the quarter stood at Rs. 2,030.12 crore, slightly lower than the Rs. 2,163.85 crore reported in the same period last year.

Segment Performance

CIE Automotive India's performance was driven by strong growth in its Indian operations, which offset challenges in the European market:

India Segment

• Revenue grew by 7.00% year-on-year to Rs. 14,591.00 crore in Q2.

Europe Segment

• Revenue decreased by 1.00% to Rs. 8,315.00 crore, impacted by market conditions and restructuring costs.

Financial Position

The company maintained a strong financial position with:

• Net Financial Debt (NFD) of Rs. -7,639.00 crore as of June 30
• NFD to EBITDA ratio of -0.52
• Return on Net Assets (RONA) of 16.80%

Operational Highlights

• The Indian business outperformed the weighted average market growth of around 5.00%.
• European operations faced challenges, with a real sales volume drop of 4.00%, partially offset by positive exchange rate fluctuations.
• Metalcastello, a European subsidiary, incurred one-off restructuring costs, impacting the segment's EBITDA.

Market Outlook

• The Indian automotive market showed positive trends across segments, with notable growth in MHCV (8.30%) and tractors (12.70%) in Q2 compared to the same quarter last year.
• The European market faced headwinds, with a decline in light vehicle production (-1.70%) and MHCV production (-7.60%) in Q2 versus the same period last year.

Management Commentary

Manoj Menon, Executive Director of CIE Automotive India, stated, "Our Q2 results demonstrate the strength of our diversified portfolio and our ability to navigate challenging market conditions. The robust performance of our Indian operations has helped offset the headwinds faced in Europe. We remain focused on operational efficiency and strategic growth initiatives to enhance shareholder value."

Dividend

The Board of Directors had previously declared a final dividend of Rs. 7.00 per equity share for the financial year ending December 31, which was paid during the quarter ended June 30.

CIE Automotive India continues to leverage its strong market position and operational excellence to navigate the evolving automotive landscape. The company's focus on the growing Indian market, coupled with strategic measures in Europe, positions it well for sustainable growth in the coming quarters.