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Diageo-owned United Spirits has posted a 12.14 per cent decrease in net profit for the fourth quarter of 2021-22 to ₹178.6 crore because of exceptional items.
These include impairment of an inter-company loan provided to Pioneer Distilleries Ltd, together with interest, impairment of fixed assets in certain operationally closed manufacturing units, and accelerated charge pertaining to unamortised brand/license fee. The increase in total income was marginal for the quarter at ₹7,791.1 crore compared to ₹7,682.7 crore in the year-ago period.
Reshaping portfolio
“We have delivered another quarter of consistent top-line and resilient Ebitda performance. The broad-based growth in the ‘Prestige & Above’ segment demonstrates resilient consumer demand, the strength of our portfolio and the focused execution of the strategy by the team. Strong cash flow generation is enabling re-investment in sustainable long-term growth,” United Spirits’ CEO Hina Nagarajan said in a statement on Friday.
She also said the company has concluded the strategic review of the select popular brands and the board has approved the sale and franchising of this portfolio to an unrelated third party. “This is a significant move to enable sharpened focus on ‘Prestige & Above’ and reshape our portfolio to help deliver our growth mission,” she said.
Debt repayment
Net sales increased 9.5 per cent lapping a strong year driven by resilient consumer demand in off-trade and gradual on trade recovery, said the statement. The Prestige & Above net sales grew 15.3 per cent benefitting from premiumisation, ongoing portfolio renovation and accelerated momentum in states with the route to market unlock.
The gross margin was at 41.7 per cent, down 220 bps, impacted by rising inflation partly offset by favourable product mix and productivity savings. The closing net debt was nil. The free cash flow which stood generated from operating activities was utilised to repay ₹556 crore of debt during the year. Interest cost savings of ₹101 crore is primarily due to debt repayment together with a reduced interest rate.
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