Covid hangover: United Spirits’ net down 43%

Our Bureau. Bengaluru | Updated on November 04, 2020 Published on November 04, 2020

Anand Kripalu, CEO and MD of United Spirits   -  REUTERS

Not able to provide guidance due to unprecedented volatility, says company

United Spirits, the country’s largest liquor manufacturer, has reported a 43 per cent decline in its second quarter net profit at ₹128 crore as the pandemic continues to impact its growth.

Total income of the company was up 2.4 per cent to ₹7,472.1 crore for the same period. However, there was a 95 per cent increase in total income on a sequential basis.

“Looking ahead, we remain cautiously optimistic with the gradual re-opening of on-premise [segment] and the ensuing festive season, recognising that safety and social distancing norms could impact demand versus prior years. Due to unprecedented variability in the macro-environment brought on by Covid-19, the company is unable to provide quantitative guidance for fiscal 2021. Our business fundamentals and our financial position is strong, allowing us to navigate this pandemic as circumstances evolve,” said Anand Kripalu, CEO of the company

A statement from the company said net sales of the Prestige & Above (P&A) segment grew 1 per cent, while net sales of the popular segment declined 12.5 per cent versus last year. Sales in priority states decreased 10 per cent. “Increased consumer prices impacted demand in this price-conscious segment and unfavourable state mix further contributed to the decline,” the statement said.

Gross margin declines

The gross margin of the company was down 42.1 per cent on a reported basis, primarily driven by contraction of business in Andhra Pradesh which resulted in a one-off inventory provision and a decline in the South franchise business. The interest costs were ₹51 crore, which was 12 per cent higher than last year due to one-off reversals in the prior year and the increase in non-debt related interest expenditure. Operating cash flow remained strong, which facilitated ₹780 crore of debt repayment during the first half of FY 2020-21.

Cash closed at ₹38 crore for the first half of the year. The strong cash performance was driven by higher underlying operating profit and improvement in working capital. Capex expenditure of ₹67 crore was mainly focused on projects for asset maintenance, health and safety. The closing net debt was ₹1,293 crore.

The P&A segment accounted for 69 per cent of net sales during the first half of the year, up 4 percentage points compared to the same period last year, primarily due to one-time sale of bulk Scotch; net of that, the P&A accounted for 67 per cent of net sales, up 2 percentage points versus last year.

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Published on November 04, 2020
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