Varun Beverages Q2 profit plunges 65% to Rs 143 crore due to lockdown

Varun Beverages Ltd (VBL), a key player in the beverage industry and one of the largest franchisee of PepsiCo worldwide, said on Tuesday its profit after tax cracked by 65 per cent year-on-year to Rs 143 crore for the April to June quarter due to restrictions imposed by the government following the outbreak of COVID-19 pandemic.The company, which follows calendar year as its financial year, had posted a net profit of Rs 405 crore in Q2 FY19.

Revenue from operations declined by 42 per cent to Rs 1,640 crore as compared to Rs 2,811 crore while total sales volumes were down 46 per cent at 10.48 crore unit cases in Q2 20 as compared to 19.55 crore unit cases in Q2 FY19.

The earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by 52 per cent to Rs 378 crore in Q2 FY20 from Rs 788 crore in Q2 19.

"The quarter started amid an uncertain and unpredictable operating environment with the proliferation of Covid-19 pandemic leading to multiple lockdowns across markets," said Chairman Ravi Jaipuria.

With this period being a key season for our product portfolio, the operating constraints severely impacted organic volumes and the overall performance throughout the second quarter, he said in a statement.

"On a brighter note, as the unlock phase started, we witnessed a steady uptick in demand on a month-on-month basis and accordingly we resumed operations at various facilities," said Jaipuria.

"The company has also been able to steadily ramp-up operations across facilities and gradually reverting to near-normal business in the current months."

In line with the guidelines of dividend policy, the board of directors has recommended an interim dividend of Rs 2.50 per share. The total cash outflow will be Rs 722 crore.