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Informist, Friday, Aug 2, 2024

--UPL Apr-Jun consol net loss 3.84 bln rupees

--Analysts saw UPL Apr-Jun consol net loss 3.32 bln rupees

--UPL Apr-Jun consol net loss 3.84 bln rupees vs 1.66 bln PAT

--UPL Apr-Jun consol revenue 90.67 bln rupees vs 89.63 bln

--UPL: Apr-Jun EBITDA 11.45 bln rupees, down 28% on year

--UPL: Apr-Jun EBITDA margin 12.6% vs 17.8% year ago

--UPL: Apr-Jun volume up 16% on year, selling price dn 14% on year

--UPL: Apr-Jun Latin America sales 26.59 bln rupees, down 10% on year

--UPL: Apr-Jun North America sales 12.35 bln rupees, up 42% on year

--UPL: Apr-Jun Europe sales 14.25 bln rupees, up 13% on year

--UPL: Apr-Jun India sales 18.72 bln rupees, down 9% on year

--UPL: Apr-Jun rest of world sales 18.76 bln rupees, up 3% on year

--UPL: Net debt increased by $639 mln in Apr-Jun

--UPL: Maintain FY25 guidance of 4-8% revenue growth

--CONTEXT: UPL management's comments in post-earnings investor call

--UPL: See stable agrichem prices ahead despite oversupply from China

--UPL: Don't see overcapacity from China normalising next 2-3 qtrs

By Rajesh Gajra

MUMBAI – UPL Ltd reported a higher-than-expected net loss for the June quarter, though revenue was higher than the Street estimate. The insecticides and herbicides manufacturer with domestic and overseas operations reported a consolidated net loss of 3.84 bln rupees in Apr-Jun, higher than analysts' estimate of 3.32 bln rupees. The company's revenue in the June quarter at 90.67 bln rupees was marginally higher than the Street estimate of 88.9 bln rupees.

The agrochemical company reported a net loss in the June quarter compared with a net profit of 400 mln rupees in the previous quarter and 1.66 bln rupees a year ago. The company's revenue was 1.2% higher from a year ago but declined 35.6% from a quarter ago.

The marginal year-on-year increase in UPL's revenue was on the back of volume rising 16% on year, selling prices falling 14%, and a negative foreign currency impact of 1%, the company said in a release.

The June quarter revenue performance was muted because of a 10% year-on-year decline in South American sales to 26.59 bln rupees and a 9% fall in Indian sales to 18.72 bln rupees. However, revenue from North America increased 42% to 12.35 bln rupees and Europe rose 13% to 14.25 bln rupees. The rest of world sales increased by 3% from a year ago to 18.76 bln rupees.

In a post-earnings investor presentation, the company said within South America volume grew in Brazil, but it was offset by a price decline. In the rest of the region, the company said revenue declined amid drought in Colombia and a "phase shift" in Argentina. Sales in North America were driven by strong volume growth in herbicides and fungicides, but pricing continued to hit key products. European sales grew on the back of strong volumes in fungicides.

In the Indian crop protection business through UPL SAS, the revenue fell 17% on year to 10.03 bln rupees due to volume fall and price decline. The seeds business of the company through Advanta Enterprises faced headwinds on account of inventory shortages with revenue declining 7% on year to 9.85 bln rupees on the back of an 8% volume decline and 1% price increase.

UPL Corporation, which houses UPL's insecticide, herbicide, and fungicide, operations outside India, recorded a revenue increase of 5% on year to 61.40 bln rupees in the June quarter. The volume jumped by 25% on year, but selling prices fell 20%.

Muted revenue growth in the June quarter notwithstanding, UPL retained its 4-8% revenue growth guidance for 2024-25 (Apr-Mar). Addressing a post-earnings conference call today, the company management said it expects selling prices to stabilise by the last two quarters of the current financial year despite oversupply from China. The company said it does not expect the overcapacity in China to normalise in the next two to three quarters.

UPL's profitability in the June quarter was significantly hit with the earnings before interest, tax, depreciation, and amortisation falling 28% on year to 11.45 bln rupees. The EBITDA margin contracted sharply to 12.6% from 17.8%. The EBITDA was hit primarily due to a 15% year-on-year increase in costs of raw materials and components consumed, including inventory changes, to 45.20 bln rupees. It was partly buffered by a 3% decline in selling, general, and administrative expenses to 24.39 bln rupees.

The overseas business through UPL Corp saw the biggest hit in profitability with EBITDA falling by 45% on year to 3.13 bln rupees in the June quarter and the margin contracting to 5.1% from 9.6% a year ago. EBITDA of Advanta Enterprises fell by 30% on year to 2.54 bln rupees and the margin contracted by 850 bps to 25.8%.

The profitability of the company's speciality chemicals segment was also hit in the June quarter. The EBITDA of the segment fell 40% on year to 2.72 bln rupees and the margin contracted to 12.7% from 16.4%. The company said the fall in margin was due to lower volume and a change in the product mix of captive speciality chemicals.

The consolidated finance costs of the company jumped 30% on year to 9.13 bln rupees. UPL's consolidated net debt rose to 275 bln rupees at the end of June from 221.74 bln rupees a quarter ago. 

Today, shares of UPL ended 4.1% lower at 537.60 rupees on the National Stock Exchange.  End

Edited by Saji George Titus

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