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Informist, Wednesday, Oct. 23, 2024

 

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--United Spirits: Gross margin grew 178 bps on year to 45.2% in Jul-Sept
--United Spirits: Jul-Sept EBITDA margin 17.8%, up 142 bps on year
--United Spirits: Jul-Sept EBITDA INR 5.07 bln, up 7.9% on year
--United Spirits Apr-Sept revenue INR 125.00 bln vs INR 120.46 bln year ago
--United Spirits Apr-Sept net profit INR 6.34 bln vs INR 5.80 bln year ago
--United Spirits Jul-Sept revenue INR 66.71 bln vs INR 67.33 bln year ago
--United Spirits Jul-Sept net profit INR 3.35 bln vs INR 3.41 bln year ago
--Analysts saw United Spirits Jul-Sept net profit INR 3.33 bln
--United Spirits Jul-Sept net profit INR 3.35 bln

 

By Avishek Rakshit 

 

KOLKATA – Weak demand conditions led alcoholic beverages company, United Sprits Ltd., to register a marginal decline in its revenues for the September quarter, but its profits were more or less in line with the Street's expectations.

 

United Spirit's profit after tax for Jul-Sept came in at INR 3.4 billion, declining 1.8% on year. Its revenue from operations was INR 66.7 billion, which declined 0.9% on year. Net sales value, which is the actual revenue left with the company after deducting excise duty, and other minor overheads, was at INR 28.4 billion, declining 0.8% on year. The Street had anticipated the company's net profit at INR 3.3 billion, and revenue at INR 29.7 billion.

 

The company reasoned that normalisation of higher-than-expected growth during Apr-Jun, a higher base in Jul-Sept of last financial year due to festive inventory build-up, and relatively muted demand conditions were the primary reasons behind the decline in its net sales value. Sales volume declined 4.4% on year to 15.4 million cases, dampening the revenue.

 

"It's a muted quarter amidst a softer than expected demand environment," Chief Executive Officer and Managing Director Hina Nagarajan said in a statement.

 

The net sales value of premium and luxury products, which accounted for around 89% of its Jul-Sept sales, was broadly flat, and the net sales value in the budget category declined 6.9% on year. As a result, revenues declined.

 

However, Nagarajan said the company is optimistic about the future outlook as it entered Andhra Pradesh – a key market – after a five-year hiatus, and at the onset of the festive season when demand for alcoholic beverages is expected to be strong. "Our key focus remains on executional excellence to deliver sustained profitable growth, while maintaining the long-term competitiveness of our portfolio," she said.

 

Despite a decline in sales and profit, its gross margins increased 178 basis points on year at 45.2%, on the back of headline pricing, continued revenue growth management and productivity initiatives off-setting inflation in the overall commodity basket.

 

The improvement in gross margins also led to growth in its operating margins, which increased 142 basis points on year to 17.8%. Its earnings before interest, tax, depreciation, and amortisation at INR 5.1 billion, increased 7.9% on year and beat the Street's estimate of INR 4.9 billion. The net profit margin was nearly unchanged at 11.8% against 11.9% year ago.

 

The growth in operating margins was largely driven by normalisation in cost overheads, lapping a prior year high base, partly offset by higher advertising and marketing costs, and staff costs, the company said in the statement.

 

Cost of raw materials declined 4.4% on year to INR 14.6 billion, and purchase of stock-in trade fell 17.0% on year to nearly INR 2 billion. However, sales promotions costs increased 7.1% on year to INR 2.6 billion, and employee benefit expenses was up 13.3% at INR 1.6 billion. Effectively, total expenses fell 1.5% on year to INR 62.6 billion.

 

On Wednesday, shares of United Spirits closed 0.5% down at INR 1,466.4 on the National Stock Exchange. The company announced its results after market hours.  End

 

Edited by Tanima Banerjee

 

 

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