Adani Wilmar Expects 11% Volume Growth In Q2, Price Cuts To Drag Revenue
However, value growth fell 13% over the previous year, reflecting the sharp fall in global edible oil prices.
Adani Wilmar Ltd. has said its volumes will grow 11% in the second quarter, helped by stable rural demand and distribution expansion.
"The volume growth was strong," the consumer goods business of Asia's richest man, Gautam Adani, said in its quarterly business update filed with the bourses on Thursday. Rural sales have been growing at a faster rate due to a higher focus on increasing the rural distribution network, the company said.
However, standalone sales value growth fell 13% over the previous year, reflecting the price cuts taken on account of the sharp fall in global edible oil prices.
The profitability for the quarter remains under stress due to divergent trends in the spot and future prices of edible oils, said the owner of Fortune and Kohinoor brands. "The local edible oil prices were also under pressure due to excessive imports by industry in the recent months."
Segment-Wise
The food business has seen strong value and volume growth, despite the decline in export revenue due to restrictions on rice exports.
Revenue from branded food products has been growing at a 40%-plus year-on-year rate for the last eight quarters and contributed around 80% to the overall segment revenue in the September quarter, according to the company. On the basis of the last twelve months, the revenue would be around Rs 4,300 crore. Also, it contributed 10% to the company’s revenue in Q2.
The company is focusing on gaining its fair share of the market in the south, where its presence has been weak.
The Kohinoor brand has crossed the Rs 250 crore revenue mark, it said.
The edible oil segment's volumes grew by around 5% in Q2, with the branded business volumes growing at a faster rate of 12% over last year.
"With the steep correction in the prices of edible oils over the last few quarters, the mix of our premium flagship brand ‘Fortune’ has been gradually improving," the company said. Historically, the edible oil volumes are relatively better in the second half of the fiscal than the first, on account of higher demand arising from out-of-home and festive consumption.
Channel-wise, quick commerce has been growing at the fastest rate and has become a large part of the company's overall e-commerce sales, the company said. Adani Wilmar’s direct distribution reached 6.5 lakh retail outlets during the quarter. "Apart from growing our sales, a robust direct reach will reduce our dependence on the wholesale channel, improving the mix of premium products in our portfolio," it said.
A day ago, peer Marico Ltd., too, estimated a drop in second quarter revenue due to price cuts. The maker of Parachute hair oil's volume growth is also expected to be in the "low single digits," as sustained inflationary pressures impeded the anticipated recovery in rural demand.
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