Q1 Results: Britannia’s Profit Misses Estimates Amid Consumption Slowdown
Tiger brand cookies, made by Britannia Industries Ltd., are arranged for a photograph in Mumbai, India. (Photographer: Scott Eells/Bloomberg New)

Q1 Results: Britannia’s Profit Misses Estimates Amid Consumption Slowdown

Britannia Industries Ltd.’s profit fell and missed the lowest analyst estimate in the quarter ended June as consumption slowed in the economy.

Net profit fell 3.5 percent year-on-year to Rs 249 crore in the April-June period, according to an exchange filing by the maker of Good Day and Tiger biscuits. That compares with the Rs 287 crore consensus estimate of analysts tracked by Bloomberg. The company reported an exceptional loss of Rs 15.6 crore provided toward voluntary retirement costs.

“On the cost front, we witnessed moderate inflation in the prices of key raw materials for the bakery business. However, the inordinate increase in milk prices impacted profitability of our dairy business adversely,” Managing Director Varun Berry said in a statement accompanying the filing.

The company’s revenue rose 6 percent over the last year to Rs 2,700 crore during the three months ended June—in line with the Rs 2,770-crore forecast.

Its operating income, or earnings before interest, tax, depreciation and amortisation, rose 1.3 percent to Rs 394 crore. Still, that missed the estimated Rs 426 crore. Operating margin contracted to 14.6 percent from 15.3 percent a year ago.

This comes at a time growth of India’s fast-moving consumer goods industry, according to Nielsen India, declined for the second straight quarter in the April-June period. A sharp pullback in rural spends has also added to the woes of domestic consumer goods makers. Volume of larger rival Hindustan Unilever Ltd., too, rose at the slowest pace in seven quarters as rural growth moderated.

Berry said Britannia Industries has tightened its belt in response to the “phase of low growth” and accelerated cost efficiency initiatives to maintain “the shape of business”.

We are quite hopeful that the government will take requisite measures to boost the economy and get it back on a high growth trajectory.
Varun Berry, MD, Brittania Industries 

Shares of the Wadia Group flagship company fluctuated between gains and losses to trade 0.75 percent higher at Rs 2,597 apiece after the earnings announcement. That compares with a 0.9 percent fall in the benchmark Nifty 50 Index.

Q1 Results: Britannia’s Profit Misses Estimates Amid Consumption Slowdown
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