INDIA: United Spirits posts YTD profits drop amid Q3 rally
- YTD net profits fall by 20% to INR2.65bn (US$49.8m)
- Net sales up by 13.4% to INR64.52bn
- YTD operating profits rise by 1.7%, hitting INR8.42bn
- Q3 net profits up by 71% to INR470.6m
United Spirits reported a 20% drop in YTD net profits
United Spirits has posted a fall in year-to-date net profits despite a strong third-quarter boosted by the company's premiumisation efforts.
Net profits dropped by 20% to INR2.65bn (US$49.8m) in the nine months to the end of December, the Indian company said yesterday (4 February). Net sales increased by 13.4% to INR64.52bn over the same period while operating profits increased slightly by 1.7% to INR8.42bn.
Q3 results were more robust, with net profits up by 71% to INR470.6m and operating profits up by 39.2% to INR2.6bn. Net sales for Q3 climbed by 11.3% to INR21.74bn.
United Spirits, which is the subject of a Diageo bid for a majority stake, said sharp volumes growth in its strategic brands played a key role in the increased Q3 profits and sales.
United Spirits chairman Vijay Mallya said: “The premiumisation story at United Spirits is not a recent one - the company has constantly been pursuing opportunities to move up the value chain and plug gaps in the price ladder by new and premium product introductions so that consumers stay within the ambit of the United Spirits portfolio and do not stray to competition.”
The company said further growth was hampered by the “spoil sport” Tamil Nadu region, where it claims the state-owned wholesale and distribution channel has pegged back United Spirts' capacity, costing it about INR2.7m in Q3.
“Strategic brands” showed good YTD growth, United Spirits said. McDowell’s No.1 Whisky family of Reserve, Platinum and DietMate grew at 20% while Royal Challenge was up 23% compared to the same period last year. The Black Dog Scotch portfolio was up by 29%.
YTD volumes increased by 3% to 92.3m cases, while third-quarter volumes climbed by 7% to 32.6m cases.
The company said applications concerning the Diageo bid are in due process with the authorities. Diageo said today it has yet to receive approval from regulators, but has received comments back from India's regulators.
In trading today, United Spirits' share price jumped by about 40%.
To read the company's official statement, click here.
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