Emami's Q2 profit falls 16% to Rs 826 mn; revenue flat at Rs 6.28 bn

Erratic monsoon and a slight delay in the arrival of winter affected sales volume, which in turn, affected revenue and the company's profitability

Emami Ltd posted a 16.22 per cent decline in its net profit at Rs 826.7 million for the quarter ended September 30, 2018, even as it posted a flat revenue at Rs 6.28 billion.

The same during the second quarter(Q2) of the last fiscal year stood at Rs 986.8 million and Rs 6.28 billion, respectively.

According to the company, the performance in Q2FY19 has been impacted due to destocking and restocking on account of GST implementation. Also, erratic monsoon and a slight delay in the arrival of winter has also affected sales volume, which in turn, affected revenue and the company’s profitability.

Abneesh Roy, research analyst at Edelweiss Securities is of the view that the decline in terms of volume is four per cent.

While the pain management category registered a fall of eight per cent in terms of sales volume, the 7-Oils-in-One brand grew by 36 per cent.

One of its top brands - the Navratna range - grew by three per cent in the quarter under review but the BoroPlus range – one of the top revenue earners – declined by seven per cent owing to a delay in the onset of winters.

Although the sales decline in Zandu Pancharishta was arrested by the company, the brand posted flat sales.

“Rising input cost of key raw materials has been a challenge. Wholesale recovery has been moderate and is expected to pick up further. While modern trade performance has been good, rural too, is picking up. With erratic monsoon and winter being slightly delayed, offtakes were affected. However, our outlook is positive and we expect to close FY19 in double digits”, Mohan Goenka, director at Emami, said.

However, at the face of flat revenue and a declining profit the Fair and Handsome brand, in international markets, achieved an all-time high market share in terms of volume at 56.4 per cent in UAE and 40.4 per cent in Bangladesh. In terms of value, in the UAE, this brand now has a 9.7 per cent market share. Overall, the international market for the company grew by four per cent. 

Naresh Bhansali, chief financial officer at Emami said that owing to re-stocking of the sales channels last year after the implementation of GST, the base was high which resulted in a flattish topline.