Apollo Tyres Shutters Netherlands Factory: Shares Brace for Impact

Shares of Apollo Tyres are likely to be in focus today as the company late Friday announced its decision of closing its manufacturing operations at Enschede plant in Netherlands. The stock is already recovering from its 52-week low, which it touched on March 3, and has gained just 8% this month so far. On Friday, the shares of the company closed 2% lower on the NSE.

The Netherlands-based unit was housed under the company’s subsidiary Apollo Tyres (NL) B.V., the tyre-maker informed the exchanges. The company plans to discontinue the operations by summer of 2026, and cited rising cost of production as the reason for the decision.

Rising energy and labour costs, inflationary pressures,  along with a fall in demand for Spacemaster and agricultural tyres triggered the move. Also, increased pricing competition from low-cost producers could certainly make operations at the Enschede plant economically unviable for the company in the long term, the Netherlands-based arm said in a release. “Unfortunately, the high cost situation is expected to continue, therefore long-term profitable production at Enschede is not in any way feasible,” Benoit Rivallant, president of Apollo Tyres NL, said.

Submitting the Request for Advice to the Work’s Council for discontinuing operations was enormously difficult, Rivallant said. “In the last couple of years, we have implemented several initiatives to reduce costs at Enschede. These initiatives resulted in some savings but most of these were completely negated due to the ever-increasing inflation." Rivallant added that the intended decision for closing the unit came after thorough investigation and careful consideration.

In FY24, Apollo Tyres NL's revenue was Rs 1,463.6 crore, which accounted for nearly 6% of the consolidated revenue, whereas its net worth was Rs 1,166.7 crore as of March 31, over 8% of the consolidated net worth.

Prior to Apollo Tyres even Eternal closed its Netherlands unit earlier this month, though it was not operational. Tata Steel, too, decided to slash 1,600 jobs in management and support roles at its Netherlands plant as part of its "transformation programme" to improve production efficiency, lower costs and increase margins.