Q2 Results: Titan Misses Profit Estimate, Cuts H2 Jewellery Business Guidance To 11%-13%
Employees hold a tray of gold rings inside a jewelry store during the festival of Dhanteras in the Zaveri Bazaar in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Q2 Results: Titan Misses Profit Estimate, Cuts H2 Jewellery Business Guidance To 11%-13%

Titan Company Ltd.’s quarterly profit missed estimates as employee benefit expenses and finance costs rose. The company also lowered the guidance of its jewellery business for the rest of the year.

Net profit increased 2 percent year-on-year to Rs 320 crore in the quarter ended September, the country’s largest branded jewellery maker said in an exchange filing. That compares with the Rs 362-crore consensus estimate of analysts tracked by Bloomberg.

The company’s employee benefits expense rose nearly 30 percent over the last year to Rs 265.7 crore during the second quarter. Its finance costs jumped fourfold to Rs 40.8 crore.

Net sales rose 0.7 percent over the last year to Rs 4,435 crore—against a forecast of Rs 4,569 crore.

H2 FY20 Guidance Cut

The company lowered the jewellery sales growth to 11-13 percent for the second half of the current financial year from 20 percent earlier, it said in the earnings call. Higher gold prices detracted customers from buying ornaments, the management said in the call.

CK Venkataraman, managing director of the Tata group company said in an interview BloombergQuint on Wednesday that consumers were trying to delay high-ticket purchases in order to conserve cash amid an uncertain environment.

The combination of the poor public sentiment towards spending in general, aggravated by the levels price of gold, contributed to lower purchases in the segment.
CK Venkataraman, Managing Director, Titan Co.

Jewellery sales fell sharply in July but rose 15 percent year-on-year between August and September, the Tata Group company had said in its quarterly update. Retail sales, therefore, grew 7 percent for the quarter. Global spot gold prices rose more than 6 percent in the three-month period, hitting a six-year high in dollar terms.

And higher prices and a weak economy, according to the World Gold Council, are expected to drag demand for gold in India this year to its lowest since 2016.

Still, the operational performance of the maker of namesake watches met estimates. Earnings before interest, tax, depreciation and amortisation rose 10 percent year-on-year to Rs 513 crore. Operating margin expanded 100 basis points to 11.6 percent.

Other Highlights: (YoY)

  • Festive season sales saw 10 percent growth.
  • Retail jewellery sales saw 7 percent growth in the September quarter.
  • Higher gold prices detracted customers from buying ornaments.
  • But maturing hedges cancelled out growth in the jewellery segment.
  • Watches sales moderated to 6.4 percent versus 13.3 percent (QoQ)
  • General consumption slowdown impacted overall sales.

Shares of Titan fell 1.6 percent ahead of the earnings announcement compared with a 0.2 percent fall in the benchmark Nifty 50 Index.

Q2 Results: Titan Misses Profit Estimate, Cuts H2 Jewellery Business Guidance To 11%-13%
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