INDIA: United Spirits sees 19% slide in Q1 profits

By | 2 August 2013

  • First-quarter net profits fall 19% to INR1.2bn (US$19.3m)
  • Q1 net sales up 6.5% to INR22bn ($361.8m)
  • Operating profits (EBITDA) fall 16% to INR2.9bn ($48m)  
  • Group Q1 volumes flat 
The groups major shareholder is now Diageo, which has control of the company

The group's major shareholder is now Diageo, which has control of the company

United Spirits has blamed a “sharp” rise in raw material costs after reporting a double-digit drop in first-quarter net profits.

In its first financial reporting since Diageo became the group's major shareholder, the company said that in the three months to the end of June this year net profits fell by 19% to INR2.1bn (US$19.3m). Sales in the period, however, rose by 6.5% to INR22bn ($361.8m), while operating profits fell by 16% to INR2.9bn ($48m). 

Volumes in the quarter were flat on a year-on-year basis at 31.3m cases.  

It comes after a drop in full-year profits, reported in May

The spirits group, which has a board that now includes two Diageo executives, pointed to a a “sharp increase in the costs of primary raw material” for the drop in Q1 earnings. The company also flagged “higher” spending on cricket's Indian Premier League through advertising and sales promotions in the quarter. 

United Spirits' Scotch whisky volumes grew 8.8% in Q1 to 8.21m cases, while its premium brands, aside from whisky saw sales up 44.2% to 0.2m cases. 

“Strategic brands of the company continue to perform well,” the group said in a statement. 

But the company warned it faces problems in the state of Tamil Nadu. “Tamil Nadu continues to be a dampener on (the) USL business with the ordering mechanism deliberately skewed to favour brands from select local vendors at the cost of the popular brands of USL,” it said. 

“From a situation three years ago where one of every three bottles sold in Tamil Nadu was from the USL stable, the USL share is now down to one out of every six bottles sold.” 

Diageo reported its full-year numbers earlier this week

Expert analysis

The Future of the Spirits Market in India, to 2016

Future of the Spirits Market in India, to 2016 is the result of Canadean’s extensive market research covering the Spirits market in India.

Sectors: Company results, Emerging markets – BRIC, Spirits

Companies: United Spirits, Diageo

There are currently no comments on this article

Be the first to comment on this article

Related research

United Spirits Limited - Strategy and SWOT Report

United Spirits Limited - Strategy and SWOT Report, is a source of comprehensive company data and information. The report covers the company’s structure, operation, SWOT analysis, product and service offerings and corporate actions, providing a 360° v...

United Spirits Limited : Consumer Packaged Goods - Company Profile, SWOT & Financial Report

Canadean's "United Spirits Limited : Consumer Packaged Goods - Company Profile, SWOT & Financial Report" contains in depth information and data about the company and its operations. The profile contains a company overview, key facts, major products a...

Diageo Plc in Spirits (World)

Since the great recession of 2008/2009 Diageo has transformed itself, primarily through acquisition, from being overly focused on mature markets to a more balanced geographic split and if, as seems likely it gains control of UB Group’s United Spirits...

Related articles

Analysis - Diageo disappoints, but how long will it last?

Diageo suffered yesterday as soft first-half numbers brought negative press and its share price fell to a 15-month low.

Analysis - Moet Hennessy offers boost to Pernod Ricard's H1 prospects

Moet Hennessy's full-year results yesterday must have made satisfying reading for the company's parent LVMH.

just the Round-Up - The week in drinks

The top ten stories published on just-drinks this week:

just-drinks tagline

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page