Asian Paints Q1 Results: Profit Falls 67% After ‘Washout’ April
Still, Asian Paints ended the quarter on a promising note, CEO Amit Syngle says.
Asian Paints Ltd.'s profit slumped in the first full quarter affected by the coronavirus pandemic that froze economic activity.
Net profit of India's biggest paintmaker declined 67% year-on-year to Rs 218.5 crore in the April-June period, according to an exchange filing. That compares with the Rs 91-crore consensus estimate of analysts tracked by Bloomberg. Its revenue, too, fell 43% over the year ago to Rs 2,923 crore, against the Rs 2,324-crore forecast.
Indian consumers had cut discretionary spending even before the Covid-19 pandemic struck. And the virus outbreak shuttered all businesses, barring essential services, in April and most of May before the government eased restrictions. That crippled the demand for industrial and household paints, offsetting the benefit cheaper crude-linked raw materials.
While the paintmakers expected to recoup some of the lost demand in the first quarter after India eased isolation curbs, a complete recovery is still some time away. Asian Paints in June had witnessed demand recover in rural areas and smaller cities.
After a "complete washout in April" due to an extended Lockdown, the decorative business segment witnessed improving business conditions over the next two months, Amit Syngle, managing director and chief executive officer at Asian Paints, said in a statement accompanying the results. “While the quarter ended in a negative territory, the business registered a healthy double-digit volume growth in June to end the quarter on a promising note,” he said.
Other business segments in India, including the industrial coatings business and home improvement category, also witnessed improving trends in the last month, albeit at a slower pace, Syngle said. The international business portfolio, according to the company, did well, supported by favourable operating conditions in markets in Middle East and Africa, though key markets of Nepal and Bangladesh in Asia were impacted by the lockdowns.
Asian Paints’ operating margin contracted to 16.5% in the first quarter from 22.7% a year ago. That’s better than the 13.5% estimated. The company’s operating profit fell 58% to Rs 484 crore, compared with the Rs 313-crore estimate.
Shares of the company are off the day's low, currently trading 1% lower at Rs 1,712.5 apiece. That compares with a 0.2% drop in the benchmark Nifty 50 Index.