Q4 Results: UPL’s Profit Plunges As Arysta Deal Brings Exceptional Loss
UPL Ltd.’s profit for the quarter ended March missed estimates due to an exceptional loss which includes cost related to acquisition of Arysta Lifesciences Ltd. and a foreign exchange loss.
Net profit plunged 72 percent year-on-year to Rs 206 crore, the company said in an exchange filing. Analysts tracked by Bloomberg had pegged the figure at Rs 907.5 crore. UPL bought Arysta Lifesciences from William Ackman-backed Platform Specialty Products Corp. last year. Abu Dhabi Investment Authority and TPG invested $600 million each, while the remainder was funded with $3 billion in debt.
Net profit in the base quarter was higher due to other income of Rs 118 crore.
The company’s exceptional loss includes severance and integration cost related to the acquisition, certain litigation costs in the U.S. regions, and Latin American region’s restructuring expenses.
The company reported a foreign exchange loss of Rs 119 crore in the quarter versus a gain of Rs 203 crore in the year-ago period.
Revenue for the three-month period rose 50 percent over last year to Rs 5,691 crore. That compares with the Rs 9,045-crore estimate forecast by BloombergQuint. The acquisition was effective from Jan. 31 and results for the quarter include Arysta's financials for February and March.
UPL expects cost synergies worth $200-250 million over two years, aided by bringing production of certain Arysta molecules in-house, joint procurement of raw material and plant and job cuts, the company’s Chief Executive Officer Jai Shroff had said at the time of the acquisition.
The deal made UPL the world’s fifth-largest global agrochemical company, selling products in the Americas, western Europe, Africa, Russia and eastern Europe, besides India.
Other highlights (YoY):
- Operating profit rose 16 percent to Rs 1,410 crore.
- Operating margin contracted 490 basis points to 16.5 percent.
Highlights of March-ended quarter, excluding the Arysta figures: (YoY)
- Revenue rose 15 percent to Rs 6,556 crore.
- Net profit was up 18 percent to Rs 864 crore in the March-ended quarter.
- Operating profit rose 18 percent to Rs 1434 crore.
- Operating margin expanded 50 basis points to 21.9 percent.
The company also recommended the payment of dividend of Rs 8 per equity share on equity shares with face value of Rs 2 apiece, subject to approval at the annual general meeting, the filing said. Record date for the same has been fixed at May 29.
This being the Golden Jubilee year, the company approved bonus shares in the ratio of one bonus share for every two shares held.