United Spirits profit declines 13% to ₹225 cr on consumption slowdown

Our Bureau Bengaluru | Updated on October 24, 2019


The country’s largest liquor company, United Spirits said there has been an overall consumption slowdown which affected its earnings. For the second quarter, United Spirits’ net profit decreased 13 per cent to ₹225 crore while total income was marginally up 2 per cent to ₹7,295.6 crore.

The growth of the Prestige & Above segment, which constitutes 65 per cent of net sales, was 4 per cent during the first half of the year, led by a weak second quarter (flat), which was impacted by overall consumption slowdown and liquidity challenges in certain key markets for Scotch as well as a temporary supply chain disruption in Bottled In Origin (BIO) Scotch portfolio, a statement from the company said.

“This impacted the ongoing premiumisation trend within the segment that we had been seeing until last quarter. Since some of these factors were temporary and have since been addressed, and as we enter the festival season, we are hopeful that growth will return in the category, especially as the macroeconomic environment starts to improve.”

The reported net sales increased 3 per cent benefiting from the second tranche of the sale of bulk Scotch inventory while the net sales growth, excluding this one-off benefit, was almost flat.

The company said its gross margin was 45 per cent down 526 bps versus last year, largely due to the adverse impact of COGS (Cost of goods sold) inflation. Reported EBITDA was ₹416 crore, down 6 per cent..

“Our revenue growth in this quarter was impacted by broad-based consumption slowdown as well as liquidity challenges in the trade channel in certain markets. We also faced some one-off operational issues. Consequently, net sales for the second quarter grew 3 per cent, including the sale of bulk Scotch inventory; net of that, underlying net sales growth for the quarter was flat,” Anand Kripalu, CEO of United Spirits, said.

Published on October 24, 2019

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