scorecardresearch
United Spirits Q2 profit jumps 113% YoY to Rs 273 cr; net sales up 14%

United Spirits Q2 profit jumps 113% YoY to Rs 273 cr; net sales up 14%

The company also registered a 494% jump in its profit after tax (PAT) at Rs 343 crore for the first half (H1) of FY22 driven by resilient consumer demand, easing of trade restrictions and the arrival of peak season.

United Spirits Ltd 's (USL) PAT margin stood 11.2% in Q2 FY22. United Spirits Ltd 's (USL) PAT margin stood 11.2% in Q2 FY22.

United Spirits Ltd (USL) on Wednesday reported a 113% rise in its standalone net profit to Rs 273.4 crore in Q2 FY22 from Rs 128.4 crore in Q2 FY21. USL's PAT margin stood 11.2% in the said period. 

Net sales jumped 14% year-on-year (YoY) to Rs 2,447 crore in Q2 FY22, reflecting a strong quarter. 

The company also registered a 494% jump in its profit after tax (PAT) at Rs 343 crore for the first half (H1) of FY22 driven by resilient consumer demand,  easing of trade restrictions and the arrival of the peak season. The company's PAT stood at Rs 87 crore in H1FY21 

The company's PAT margin stood at 8.4% in the first half of FY22. 

Also Read: CCI raids offices of Associated Alcohols, Som Distilleries in price fixing probe

"This double-digit topline growth reflects improvement in trade conditions, improved mix, excellent execution in off-trade channel and gradual on-trade recovery. The initial restrictions on on-premise establishments and consumer behavioural shifts impacted the balance between the on- and off-premise occasion in first half of this fiscal," United Spirits said in a statement. 

Commenting on the results, Hina Nagarajan, CEO, USL said, "We have delivered a strong quarter and the performance underpins improved momentum across the business. The business has emerged stronger from the pandemic and our people have responded with pace, agility, and creativity to seize the opportunities in the marketplace." 

"We are focused on sustaining the growth momentum while working on revenue management and productivity initiatives across the value chain to counter the rising inflation trend being experienced while exiting the quarter," he added. 

Net Sales of Prestige & Above segment increased 32.4% while net sales of Popular segment increased 20.4%. 

USL classifies its brands under two categories: Prestige & Above segment, which comprises the likes of Johnnie Walker, Vat 69 and McDowell's No 1 whiskey, and the Popular segment, which includes White Mischief vodka and Bagpiper whiskey. 

Overall volume increased 22.4% with expansion of 23.1% in the Prestige & Above segment, marginally outpacing Popular segment volume expansion of 21.7%. "Underlying price/mix for the half-year was favourable 5.46%, mainly due to good momentum in Scotch performance and favourable brand mix," the company noted in its statement. 

Also Read: Who is Hina Nagarajan, United Spirits' next MD, CEO

Reported EBITDA (Rs 593 crore) increased 209% for the first half of the year and the margin increased by 856 bps. Gross profit increase of Rs. 469 crore was predominantly volume and mix led, aided by productivity initiatives and a deflated base of Q1FY21 due to the COVID-19 slump.

Reported staff cost was at 8.7% of sales, up 51bps while other overheads were at 14.6% down 613bps due to cost consciousness drive and relatively better operating leverage.  

Controlled and effective marketing investments were limited to activities that could give tangible results amidst a restricted operating environment. On-premise channel activation was impacted due to initial statewide lockdowns and regulated on-trade environment, the statement read further. 

Cash closed at Rs. 29 crore for the first half of the year. The half-year witnessed excellent cash flow generation driven by growth in EBITDA. 44% of the profit was invested in working capital to support strong business delivery and 22% was converted into free cash flow for the repayment of debt and interest. Capex was primarily focused on asset care, productivity, support core growth and health and safety. 

Closing net debt stood at Rs. 443 crore. The company repaid its short term borrowings amounting to Rs. 113 crore during the first half of the year. This reduction in debt together with a favourable mix helped reduce total interest costs by 41%. 

The Prestige & Above segment accounted for 72% of net sales during the first half of the year, up 245ppts compared to the same period last year. Prestige & Above segment net sales increased 32.4% during the first half of the year due to weak prior period comparators.  

"During the first half of the year, our Premium & Luxury portfolio grew faster than the Prestige portfolio led by our premiumisation efforts. Within the Scotch portfolio, Johnnie Walker, Black & White and J&B showed robust growth," USL noted. 

The popular segment accounted for 28% of net sales during the first half of the year, down 170ppt compared to the same period last year. The popular segment net sales grew 20.4% during the first half. Net sales of the Popular segment in Priority states grew 17% during the first half of this year. 

Published on: Oct 27, 2021, 5:27 PM IST
Posted by: Manali, Oct 27, 2021, 5:22 PM IST