Hester Bio Q1 net dips 22% on low demand for high-value products

- Ahmedabad | Updated on July 30, 2020 Published on July 30, 2020

Facing economic stress due to Covid-19, farmers focus on survival of animals rather than productivity

Rutam Vora

A dip in demand from poultry and milk segments during the lockdown period has dented the first quarter profits of animal healthcare major Hester Biosciences Ltd. The company posted standalone net profit of ₹7.6 crore for the first quarter ended June, against ₹9.8 crore in the corresponding quarter last year, a dip of 22 per cent year-on-year.

EBIDTA margins fell from nearly 40 per cent to about 34 per cent as demand for high-value, high-profit animal healthcare products took a hit.

Hester witnessed a change in product mix with a tilt towards low-value products such as antibiotics. Rajiv Gandhi, CEO and MD, Hester Biosciences, told BusinessLine: “The Covid-19 pandemic also hit the poultry and dairy sector, hence their economies were also impacted. As a result, most of the demand was for essential or necessary vaccines and products, which were low in value than high-value and high-profit animal healthcare products such as growth promoters, vitamin pre-mix, milk enhancer etc. In this crisis, a farmer or poultry owner isn’t going for such high value products, as he is primarily focusing more on survival than bringing efficiency in output.”

Sales dip

Hester’s total sales dipped by 8 per cent during the period to ₹39 crore, against ₹42 crore in the same quarter last year, the company announced after a board meeting on Thursday.

The poultry segment remains under stress as the bulk demand for meat and eggs from restaurants and hotels remain absent, while the dairy sector has shown a revival in consumption.

The company's poultry healthcare business reported turnover of nearly ₹30 crore, which contributed about 77 per cent to the total turnover.

The animal healthcare division, which contributed 18 per cent to the total turnover, reported sales of nearly ₹7 crore — a growth of about six per cent over last year.

Commenting on the demand outlook for the immediate months, Gandhi said the movement of goods through road and air has improved considerably enabling transportation of the company’s vaccines and animal healthcare products to different parts of the country.

“The demand should start now. We are seeing an increase in demand for milk and poultry (over the lockdown period.). But once the hotels and restaurants resume there will be an upward shift in poultry demand, which will positively impact our vaccines products,” he added.

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Published on July 30, 2020
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