Tata Consumer Q4 Results: Net Profit Slumps 44%, Margin Contracts
Tata Consumer Products Ltd. saw a fall in quarterly consolidated profit and a contraction in margin over the preceding three months as expenses rose.
Net profit of Tata Tea and Tata Salt maker declined 44% sequentially to Rs 133.34 crore in the January-March period, according to an exchange filing. That compares with the Rs 186.9-crore consensus estimate of analysts tracked by Bloomberg.
Q4 Highlights (Quarter-On-Quarter)
- Revenue fell 1% to Rs 3,037.22 crore, compared with the estimated Rs 2,856.4 crore.
- Operating profit fell 17% to Rs 300.2 crore, against Rs 353.1-crore forecast.
- Margin contracted to 9.% from 11.8%, dragged by higher employee benefit costs and other expenses. Analysts had pegged the metric at 12.4%.
- Employee benefit expense rose 12.02% to Rs 270.22 crore.
- Other expenses rose 16.3% to Rs 404.40 crore.
While India beverages and foods businesses maintained revenue, the international beverage business revenue declined versus the December quarter. “Consolidated Ebitda growth for the quarter was impacted by tea inflation in India and increased A&P investments, that more than offset the strong Ebitda growth in India food and International business,” the company said in it earnings presentation.
During the year, Tata Salt gained market share with its value-added salts portfolio growing faster, which is in line with the company’s premiumisation strategy.
The company added five new products to its ready-to-cook category under the “Tata Sampann” brand. They include “haldi doodh” mix, “masala daliya khichdi” mix, dhokla mix, supergrain ragi idli and supergrain ragi dosa mixes.
“In line with our strategic priority of exploring new opportunities, the health and wellness focused foods portfolio was further enhanced through acquisition of Kottaram Agro Foods Pvt (Soulfull brand)—now renamed as Tata Consumer Soulfull,” the company said in an exchange filing. “This opens significant opportunities in the fast growing ‘on the table’ and ‘on the go’ segments.”
The company said integration of its India foods and beverages businesses is now complete. “A redesigned sales and distribution system is in place with digitisation across channel partners, a new integrated business planning system covering demand and supply planning is now live.”
“We delivered yet another quarter of strong revenue growth, driven by double-digit volume growth (year-on-year) in India business,” Sunil D’Souza, managing director and chief executive of Tata Consumer Products, was quoted as saying. “During the year, we have stepped up our distribution reach, invested behind our brands, and focused on premiumisation in our core portfolio.”
He said the company “continued the momentum in driving the digital agenda with digitalisation of channel partners”.
Conference Call Highlights
- Second wave of Covid-19 in India creating uncertainty in the near term, but outlook for consumer staples remains stable.
- Out-of-home consumption picking up in international markets.
- Will hike tea prices if it turns expensive, but company expects prices to moderate with the new crop.
- Focused on expanding rural distribution.
While the consumer goods sector continued to recover from the pandemic-driven disruptions, Tata Consumer’s peers Hindustan Unilever Ltd., Britannia Industries Ltd. and Nestle India Ltd. flagged raw material price pressures in the reported quarter.
Tata Consumer had replaced Gail (India) Ltd. in the benchmark Nifty 50 in its latest semi-annual rejig, effective March.
Shares of Tata Consumer ended flat before the results were announced compared with a 0.7% rise in Nifty 50.