INDIA: United Spirits cheers strong H1
- Half-year net profits jump by 46% to INR2.86bn (US$58m)
- Net sales rise by 32.3% to INR37.26bn
- Operating profits increase by 28.7% to INR6.43bn
- Balaji Distilleries buy inflates sales, organic growth still strong
United Spirits continues strong performance
United Spirits has reported strong double-digit rises in sales and profits for the first half of its fiscal year, lifted by both organic growth and the acquisition of Balaji Distilleries.
United Spirits said today (8 November) that net profits leapt by 46% for the six months to the end of September, to INR2.86bn (US$58m). Sales jumped by 32% on the same period of the previous year, to INR37.26bn, said the firm, which is part of Vijay Mallya's UB Group.
The acquisition of Balaji Distilleries, completed at the end of 2010, lifted net sales for the half-year. Operating profits increased slower than sales, up by 28% to INR6.43bn, due to higher raw materials costs. Still, the company welcomed the strong overall performance, which includes what is traditionally one of its weakest quarters, the three months to the end of September.
For the second quarter, United Spirits saw net sales rise by 32% to INR17.9bn. Operating profits increased by 44%, inflated by lower promotional spend over the three months. Meanwhile, net profits doubled to INR1.48bn, partially thanks to exchange rate gains.
Without Balaji's contribution in the second quarter, United Spirits said that it would still have seen net sales rise by 19%, with volume sales up by 8%.
Interest costs increased due to higher debt levels. However, the group said that it has given itself extra breathing space by refinancing the GBP370m (US$594m) of remaining debt from its acquisition of Whyte & Mackay in 2007. The group has secured a seven-year loan with a three-year moratorium on payments and a "ballooning repayment" over the following four years.
Looking ahead, United Spirits said that it expects brand spend to rise as it pushes several new products, such as Signature Premier Scotch whisky and Vladivar vodka. It added that its newly-created emerging markets division has already gained access to new markets in Asia and Africa, although it did not specify which countries.
For the company's figures, click here.
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