Unaudited Financial Results for the quarter ended 30 June 2019
PAT INR 197 crores, up 143% in F20 Q1
First quarter performance highlights:
• Reported net sales increased 10%, partially benefiting from a one-time sale of bulk Scotch. Net sales excluding this one-time benefit grew 6%, impacted by general elections.
• Prestige & Above segment net sales grew 9%.
• Popular segment reported net sales grew 2%. Net sales, after adjusting for the impact of operating model changes,grew 3%, benefitting from a softer preceding quarter in one of the key states. Net sales of Popular segment in priority states grew 4%.
• Gross margin was 47.3%, down 291bps versus last year, primarily due to the adverse impact of COGS inflation as well as due to part-absorption of excise duty hike in Maharashtra. Underlying* gross margin decline was 359bps.
• Reported EBITDA was Rs. 395 Crores, up 95%. Despite gross margin erosion versus last year, EBITDA margin was 17.8%, up 772bps, primarily driven by savings in operating costs and phasing effect of marketing investment.Underlying* EBITDA increased 42% and underlying* EBITDA margin was 16%; 407bps higher than last year.
• Interest costs were Rs. 52 Crores, 11% lower, driven by our continued focus on debt reduction.
• Profit after tax was Rs. 197 Crores, up 143%.
Anand Kripalu, CEO, commenting on the quarter ended 30 June 2019 said:
"During the quarter, our core business was affected by general elections in line with our earlier guidance. However,benefited by a one-time sale of bulk Scotch, net sales grew 10%; excluding which, net sales grew 6%.
The Prestige and Above segment net sales grew 9%, on a base of 19% growth in the same quarter last year. Within that,our Scotch portfolio continued to do well, particularly Black Dog and Black & White, with both showing strong momentum.
On profitability, COGS inflation as well as adverse price/mix significantly impacted gross margin for the quarter. However,I am pleased that despite considerable gross margin erosion, we delivered 407bps of underlying* EBITDA margin improvement, primarily through savings in our operating costs, notwithstanding the phasing benefit of marketing investment.
We trimmed down the reinvestment rate for the quarter in light of the ongoing general elections; however, it should normalize over the course of the year as investing behind our brands continues to be an area of strategic priority for us.
Improved operating performance combined with lower interest costs have helped us deliver an overall PAT increase of 143% versus last year.
Looking ahead, while we remain watchful of the broader economic slowdown and its impact on the overall consumption in the near term, we remain committed to our medium-term ambition to grow top line by double digits and to improve EBITDA margin to mid-high teens."