First quarter performance highlights:
- Net sales increased 34.3%, lapping a soft prior year comparator, with growth driven by resilient consumer demand in the off-trade and recovery of the on-trade.
- Prestige & Above net sales grew 43.7% benefitting from premiumisation. Performance in the quarter was impacted by constraints in scotch supplies in select markets on account of ongoing pricing deliberations with the Government.
- Popular segment net sales grew 13.1% within which the priority states grew 17.1%.
- Gross margin was 40.9%, down 366bps; primarily reflecting the adverse impact of cost inflation, which was partially offset by favourable product mix and productivity savings.
- Our marketing reinvestment rate during the quarter was 6.5% of net sales. Staff costs includes a one-time grant for our employees for their outstanding contribution, commitment, and resilience in extremely challenging times.
- EBITDA was Rs. 274 Crores, up 63.5%. Reported EBITDA margin was 12.6%, up 226bps, reflecting operating leverage on fixed costs. Underlying EBITDA margin excluding the one-time special pay-out for our employees stands at 13.8%.
- Interest cost of Rs. 17 Crores is a non-debt related expense.
- Tax credit is on account of recognising a deferred tax asset, due to certainty in utilisation of the carried forward capital losses.
- Exceptional items include on-going business restructuring expenses.
- Profit after tax was Rs. 210 Crores, up 204.2% and PAT margin was 9.7%.
Ms Hina Nagarajan, CEO, commenting on the quarter ended 30 June 2022 said:
“We have delivered another quarter of steady performance in a challenging operating environment. Our business today is ahead of pre-pandemic levels, substantiating the resilience of our category. Double digit inflation, scotch supply constraints in select markets and a one-time special grant to our people in recognition for the outstanding contribution in extremely challenging times, impacted the EBITDA margin delivery.
Looking ahead, in the shorter term, we expect inflationary pressures to continue. Our confidence in the medium to long-term prospects of our industry, the resilience of our business and our ability to navigate headwinds remains high. We remain focused in our strategy of re-shaping the portfolio towards premiumization, revenue growth management initiatives, enhancing our value chain productivity pipeline and continuing to build the organization of tomorrow, to deliver consistent growth and long-term value creation for all our stakeholders.”
About Diageo India
Diageo India is the country’s leading beverage alcohol company and a subsidiary of global leader Diageo PLC. The company manufactures, sells and distributes an outstanding portfolio of premium brands such as Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, Royal Challenge, McDowell’s No1, Smirnoff and Captain Morgan.
Headquartered in Bengaluru, our wide footprint is supported by a committed team of over 3300 employees, 49 manufacturing facilities across states and union territories in India, a strong distribution network and a state-of-the-art Technical Centre.
Incorporated in India as United Spirits Limited (USL), the company is listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. For more information about Diageo India, our people, our brands, and performance, visit us at www.diageoindia.com. Visit Diageo’s global responsible drinking resource, http://www.DRINKiQ.com, for information, initiatives, and ways to share best practices.
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