Earnings Review
UPL's consol net loss widens in Jul-Sept amid poor demand
This story was originally published at 19:16 IST on 11 November 2024
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--UPL Jul-Sept consol net loss INR 4.43 bln vs INR 1.89 bln loss year ago
--UPL Jul-Sept consol revenue INR 110.90 bln vs INR 101.70 bln year ago
--UPL Apr-Sept consol net loss INR 8.27 bln vs INR 230.00 mln loss year ago
--UPL Apr-Sept consol revenue INR 201.57 bln vs INR 191.33 bln year ago
--UPL Jul-Sept consol EBITDA INR 15.76 bln vs INR 15.73 bln year ago
--UPL Jul-Sept consol EBITDA margin 14.2% vs 15.5% year ago
--UPL Jul-Sept crop protection revenue INR 94.48 bln vs INR 86.44 bln yr ago
--UPL Jul-Sept seeds business revenue INR 11.13 bln vs INR 10.72 bln yr ago
--UPL: Jul-Sept volumes up 16%, price down 7%
--UPL: Contribution margins hit by pricing pressure in crop protection ops
--UPL: Saw favourable pricing for grain, sorghum, corn in seeds business
--UPL: On path to achieve EBITDA, net debt guidance levels
--UPL: Net debt $3,285 mln as on Sept 30 vs $3,696 mln year ago
--UPL: Jul-Sept Latin America revenue INR 50.43 bln vs INR 50.32 bln year ago
--UPL: Jul-Sept Europe revenue INR 13.68 bln vs INR 12.63 bln year ago
--UPL Jul-Sept India revenue INR 15.71 bln vs INR 13.87 bln year ago
--UPL: Positive for FY25, expect accretive margins in Oct-Mar
--UPL: Expect strong demand for farmgate, but see pressure on lower pricing
--UPL: Lower input cost to offset pricing pressure for UPL Corp in Oct-Mar
By Apratim Sarkar and Ketan Barot
MUMBAI – UPL Ltd. has reported a consolidated net loss for the second consecutive quarter in Jul-Sept as demand for agrochemical and fertiliser products fell due to excess rainfall in India. The company posted a consolidated net loss of INR 4.43 billion during the September quarter compared to INR 234.63 million loss estimated by analysts and INR 1.89 billion loss reported a year ago.
The agrochemical company's consolidated revenue rose 9% on year to INR 110.90 billion in Jul-Sept. Analysts had expected a consolidated revenue of INR 105.68 billion. The company's on-year revenue growth was the highest in the last seven quarters. Other income for the quarter increased to INR 1.11 billion, up 5.7% on year.
In Apr-Sept, the company reported a consolidated net loss of INR 8.27 billion against a loss of INR 230 million in the year-ago period. The company's consolidated revenue for the first six months of the current financial year was INR 201.57 billion, up 5.4% on year.
The company's total expenditure for the latest quarter was INR 115.05 billion, up 10.9% from INR 103.73 billion in the year-ago quarter. Cost of materials for the quarter rose 11.3% on year to INR 58.23 billion. The company's finance cost for the September quarter was INR 10.70 billion, up from INR 8.71 billion in the year-ago quarter. Depreciation and amortisation cost for the quarter was INR 6.97 billion, up 6% from a year-ago quarter.
In Jul-Sept, the company spent INR 13.37 billion on employee benefits, up from INR 12.51 billion in the year-ago quarter. Other expenses increased to INR 22.03 billion, up 6.2% from INR 20.74 billion a year ago. The company's tax outgo for the latest quarter was INR 1.38 billion, against a tax credit of INR 960 million in the year-ago quarter.
The company attributed the growth in revenue for the September quarter to a 16%-on-year increase in volumes, a 7% decline in prices, and almost flat foreign exchange rates. The company's consolidated earnings before interest, tax, depreciation, and amortisation for the September quarter was INR 15.76 billion, almost flat on year. For the September quarter, the company reported an EBITDA margin of 14.2%, down 130 basis points from the year-ago quarter.
UPL's differentiated and sustainable portfolio continued to outperform, the company said, adding that the portfolio's share in the crop protection segment increased to 42% in the latest quarter from 39% a year ago. The selling, general, and administrative expenses took a $16 million hit due to expected credit loss and write-offs, mainly in Latin America. The seeds business had margin accretive growth this quarter due to favourable pricing of sorghum and corn. The company's net debt was $3.29 billion as of Sept. 30, lower than $3.70 billion a year ago but higher than $2.66 billion as of Mar. 31.
"Our volume growth continues, and we are on the path to achieving our EBITDA and net debt guidance levels," said Jai Shroff, chairman and group chief executive officer.
The company generated revenues of INR 50.43 billion from Latin America, almost flat on year, and INR 13.68 billion from Europe, up 8% on year. The company generated revenues of INR 5.58 billion from North America, up 10% on year, and INR 15.71 billion from India, up 13% on year. The company generated revenues of INR 25.50 billion from the rest of the world, up 29% on year. The strong growth in Europe was led by fungicide and natural plant protection volumes, and the growth in Brazil, North America, and India was led by volumes, along with margin accretion.
UPL saw volume growth across key regions which was offset by pricing pressure. It expects strong farm gate demand, with some headwinds due to lower farm gate pricing. It also expects pricing pressure to be offset by lower input costs in Oct-Mar for key active ingredients, with an upside on margins.
The company said its subsidiary UPL Sustainable Agri Solutions Ltd. expects continued focus on stricter credit, inventory norms, and margins to drive better cash flows, and strong rabi demand. UPL's Advanta expects continued business momentum to yield favourable results in Oct-Mar. UPL Specialty Chemicals expects strong captive business expectations to yield strong Oct-Mar. On Monday, shares of UPL closed at INR 515.15 on the National Stock Exchange, down 7.6%. End
US$1 = INR 84.39
Edited by Tanima Banerjee
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