Analyst Concall
UPL sees Brazil sales volume in Oct-Mar in mid-single digits
This story was originally published at 21:26 IST on 11 November 2024
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--UPL: Expect to meet FY25 guidance of over 50% rise in EBITDA
--CONTEXT: UPL management's comments in post-earnings analyst concall
--UPL: Dealer destocking near complete in crop protection pdts of UPL Corp
--UPL: Order patterns in crop protection pdts of UPL Corp normalising
--UPL: See margin accretion in UPL Corp in Oct-Dec
--UPL: See headwinds in commodity prices for UPL Corp in Oct-Dec
--UPL: See Brazil sales volume growth Oct-Mar in mid-single digit YoY
--UPL: See crop protection pdt pricing headwinds in Brazil dissipate Oct-Mar
--UPL: Expect to meet 4-8% revenue guidance for FY25
--UPL: Jul-Sept average cost of debt 7% vs 6.25% year ago
By Apratim Sarkar
MUMBAI – UPL Ltd. expects the Brazil sales volume growth of its overseas subsidiary UPL Corp. to be in mid-single digits for Oct-Mar as compared to the year-ago period. The company's management, in a post-earnings conference call with analysts Monday, said it sees agrochemical pricing headwinds in Brazil to dissipate in the second half of the current financial year.
In the September quarter, Brazil's market witnessed strong volume growth, partially offset by softening of prices. UPL Corp. accounts for nearly 80% of the revenue for UPL, whose biggest market is Brazil.
UPL Corp.'s sales volume increased 13% on year for the reporting quarter and rose 18% in Apr-Sept.
The management said it expects headwinds in commodity prices for UPL Corp. in the December quarter. UPL Corp. is the global agrochemical products subsidiary of the company selling insecticides, herbicides, and fungicides to farmers in South America, North America, Europe, and the rest of the world excluding India. The management said for UPL Corp., the dealer destocking, which had hit its revenue in the last few quarters, is currently near completion--and ordering patterns are normalising. The company also expects margin accretion in UPL Corp. in the December quarter.
The management said it expects to meet its 4-8% revenue growth guidance for 2024-25 (Apr-Mar). The company also expects to meet this guidance on the back of a 50% expected rise in its earnings before interest, tax, depreciation, and amortisation in FY25.
In Jul-Sept, the company's average cost of debt was 7% compared to 6.25% in the year-ago quarter. The management said it is focused on improving the working capital, and the company is confident of achieving its target of INR 300-400 million of operational free cash flows, which would lower its outstanding debt.
Talking about its regional business, the management said headwinds in North America resulting from price adjustments have normalised in the first half of the current financial year. The North American market grew 16% on year in the current quarter. The company said its revenue in Europe grew 18% on year due to strong growth in its fungicide business. The company's overall growth in Africa was moderated by a decline in sales in Southeast Asia and Japan. The revenue growth from the rest of the world was down 2%, backed by a decline in the herbicides and insecticides business.
UPL reported a consolidated net loss of INR 4.43 billion during the September quarter compared to 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. On Friday, shares of UPL closed at INR 515.15 on the National Stock Exchange, down 7.6%. End
Edited by Tanima Banerjee
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