United Spirits posts Q1 net loss of ₹215 crore

Our Bureau. Bengaluru | Updated on July 27, 2020

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United Spirits, India’s largest liquor manufacturer, posted a net loss of ₹215 crore for the first quarter of the current fiscal, impacted by the nationwide lockdown enforced to contain coronavirus in the country. For the same period last year, the company posted a profit of ₹197 crore.

“During the quarter, our business was severely impacted by Covid-19 led lockdown and the ensuing disruption. The business remained shut for more than a month during the quarter and resumed only gradually thereafter, in line with varying state level restrictions. The on-premise channel continued to remain shut for the entire quarter,” said Anand Kripalu, MD and CEO, Diageo India. United Spirits is the name of the listed entity of Diageo India.

Net sales declined 54 per cent to ₹1,030 crore for the same period. The lockdown resulted in complete closure of business for than a month during the quarter and only gradual resumption thereafter. After adjusting for the one-time sale of bulk Scotch in the same period last year, underlying net sales declined 51 per cent. Net sales of Prestige & Above segment declined 52 per cent; net sales of Popular segment also declined 52 per cent.

EBITDA for the quarter was negative at ₹78 crore, versus a reported EBITDA of ₹395 crore in the same period last year (underlying EBITDA net of the one-time bulk Scotch sale of ₹339 crore). Reported staff cost decreased 13 per cent and other overheads decreased by 3 per cent, despite a spike in provisions induced by Covid. Additionally, marketing investment for the quarter was trimmed down given the lockdown and the current situation.

“Looking ahead, we will have to navigate several unknowns over the course of this year, including state-level lockdowns that are being re-imposed as well as the real impact of recent tax-related price increases on demand. Hence, we will continue to evolve and dynamically manage the situation in the near term while staying committed to investing for the success of our business and staying true to our longer-term strategy,” said Kripalu.

Published on July 27, 2020

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