United Spirits profits up 35% to ₹259 crore

United Spirits has shrugged off last quarter’s dip in performance with a 35 per cent increase in net profit to ₹259 crore during the third quarter,led largely by a sharp growth in sales of Prestige and Above portfolio.

The total income of the company was flat at ₹7,824.8 crore. “We saw a sequential improvement in the current quarter with overall sales growing 3 per cent, led by our Prestige and Above portfolio growth of 8 per cent, even as the broader consumption slowdown continued to weigh on the overall business,” the company’s CEO, Anand Kripalu said in a statement. We are optimistic that the economy will gradually recover, and with that the business should bounce back more strongly. “We remain committed to our medium-term ambition of growing the top line by double-digits and to improve EBITDA margin to mid-high teens.”

He said there has been good momentum in the Prestige and Above portfolio, a sharp improvement from the previous quarter, when the segment had not grown, in part due to the company’s internal operational challenges. Additionally, during the quarter, the company saw a return of premiumisation trend, with each sub-segment growing faster than the one beneath it, and especially with its Scotch brands showing strong growth. During the quarter, the Popular segment net sales declined 5 per cent overall, led by a decline of 4 per cent in priority states.

Inflation in raw material costs

“During the third quarter, we continued to experience substantial inflation in our key raw material costs. While this resulted in significant compression in gross margin, we still delivered an EBITDA margin of 16.4 per cent, up 207 bps. The marketing reinvestment rate for the quarter was 9.7 per cent, bringing the reinvestment rate for this fiscal to 8.4 per cent, within our guided range for the year,” he said.

During the quarter, net sales grew 3 per cent; exhibiting an improving trend over the previous quarter, but still impacted by the broader consumption slowdown, while the interest costs were ₹46 crore, 21 per cent lower than last year.