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INDIA: Weak Q3 hampers United Spirits nine-month performance

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  • Nine-month net profits up by 2.2% to INR3.32bn (US$66m)
  • Net sales rise by 18.9% to INR56.8bn  
  • Operating profits rise by 7.2% to INR8.28bn
  • Q3 profits down 64%, hampered by duty tax, costs
  •  

United Spirits has seen weak third-quarter trading take the shine off a rise in sales and profits for the first nine months of its fiscal year.

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United Spirits saw net profits for the three months to the end of December fall by 64% on the same period of last year, to INR470.6m (US$9.4m). Operating profits slipped by 32% for the quarter, to INR1.85bn, while net sales dipped by 0.3% to INR19.5bn. 

The distilling arm of Vijay Mallya’s UB Group said that it was damaged in the quarter by rising raw material costs and a steep hike in duty taxes in the states of Tamil Nadu and West Bengal. The company added that the same quarter of the previous year included one-time gain from the merger of Tamil Nadu-based Balaji Distilleries.

However, sales in the third quarter were also considerably affected because “orders for the company's products in Tamil Nadu were hampered by a sustained campaign to promote the sales of local distilleries at the cost of recognised market leader brands of USL," the firm said. "In markets other than Tamil Nadu and West Bengal, sales volumes grew by 10%," USL added. Volumes sales of premium and prestige spirits rose by 7%, to 6.95m cases.

Despite a tough third quarter, United Spirits' strong first-half kept the firm ahead of last year for the first nine months of its current fiscal. Nine-month net profits rose by 2.2% to INR3.32bn, with operating profits up by 7% to INR8.28bn. Net sales increased by 18.9% to INR56.8bn.

The results were posted a day after shareholders approved the raising of US$225m through foreign currency convertible bonds.


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