Britannia Industries Q1 Results: Profit Rises 11%, Meets Estimates

Britannia Industries Ltd.'s first-quarter profit rose, meeting analysts' estimates, led by an expanded distribution network and launch of products tailored to regional preference amid a weak demand environment.

The consolidated net profit of the Marie Gold biscuit-maker increased 11% over the previous year to Rs 504.88 crore in the quarter-ended June, according to an exchange filing on Friday. That compares with the Rs 527.77-crore consensus estimate of analysts tracked by Bloomberg.

Excluding the one-off costs, its net profit rose 14.5% to Rs 524 crore.

The one-off items include Rs 18.5 crore paid towards workers under the voluntary retirement scheme announced for its now-closed facility in Taratala, Kolkata. Additionally, expenditure of Rs 6.13 crore was incurred for contract labourers at the same factory, according to the biscuit-maker.

• Revenue rose 6% to Rs 4,250.3 crore versus Rs 4,010.7 crore (Bloomberg estimate: Rs 4,177.8 crore).

• Operating profit rose 9% to Rs 753.66 crore versus Rs 688.88 crore (Bloomberg estimate: Rs 774.1 crore).

• Margin stood at 17.7% versus 17.2% (Bloomberg estimate: 18.5%).

Britannia's revenue growth was driven by high single-digit volume growth.

"We come out of a challenging financial year that witnessed consumption slowdown, particularly in rural India," said Vice-chairman and Managing Director Varun Berry. "We continue to make positive strides in rural as we expand distribution footprint and enhance product offerings to align with regional preferences to benefit from the consumption growth in rural."

Like peers including Dabur India Ltd. and ITC Ltd., Britannia too saw rural market share growing at a faster clip than urban in the June quarter. "We are actively leveraging the rapidly growing modern trade and e-commerce channels, both growing handsomely compared to previous year," he said.

During the quarter, the company launched Pure Magic Stars and Golmaal variant, which Berry believes have contributed to heightened consumer excitement and strengthened our brand franchisee.

On the cost and profitability front, he said that the company is closely monitoring fluctuations in commodity prices and the evolving geopolitical landscape.

Most FMCG companies have reported subdued first-quarter earnings on account of sluggish demand, dampened by continued inflation, extreme heatwave that impacted out-of-home consumption and competition from local players. Companies are seeing early signs of revival in rural demand, but they expect the pace of recovery to remain weak until festive season.

ITC Ltd. missed street estimates on net profit, reporting a flat growth, while margin contracted due to high costs. The company said it is seeing sequential uptick in prices of certain commodities like sugar and edible oil.

Other players such as Hindustan Unilever Ltd. posted a moderate uptick in volume growth over the previous quarter, while price cuts restricted revenue growth. Nestle India Ltd., too, reported lower-than-estimated rise in profit as price hikes pushed shoppers to seek cheaper alternatives.

Shares of Britannia Industries closed 0.63% higher on Friday, as compared with a 1.25% loss in the benchmark Nifty 50. The results were declared after market hours.