The pesticides maker reported a consolidated net loss of Rs 1,217 crore in Q3 FY24 as against a net profit of Rs 1,087 crore recorded in Q3 FY23.
Revenue from operations declined 27.72% YoY to Rs 9,887 crore in the quarter ended 31 December 2023.
Revenue and EBITDA for Q3 continued to be impacted by global channel destocking and ongoing pricing pressure in post patent space exacerbated by higher rebates.
Loss before exceptional items and tax was at Rs 1,649 crore as against profit before exceptional items of Rs 1,515 crore reported in the same quarter a year ago.
Exceptional items stood at Rs 17 crore in Q3 FY24, mainly includes cost related to losses due to fire, restructuring in Europe, litigation and severance related expenses.
EBITDA slumped 86% to Rs 416 crore in the December quarter from Rs 3,035 crore reported in Q3 FY23. EBITDA margin dropped to 4.2% in Q3 FY24 as compared to 22.2% recorded in the corresponding quarter previous year.
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UPL said that the revenue and EBITDA for Q3 continued to be impacted by global channel destocking and ongoing pricing pressure in post patent space exacerbated by higher rebates.
During the quarter, contribution profit jumped 54% YoY to Rs 2,689 crore and contribution margin declined to 42.6% from 42.6% in Q3 FY23. Liquidation of high-cost inventory, and higher rebates to support channel partners, impacted contribution margin, it added.
The companys revenue from crop protection was at Rs 8,495 crore (down 30.68% YoY) and non agro came in at Rs 520 crore (down 9.25% YoY). However, income from seeds business was at Rs 931 crore (up 2.08% YoY)
UPL's income from North American tumbled 64% YoY, revenue from Europe declined by 30% YoY, followed by Latin America (down 28% YoY) and India (down 20% YoY) and rest of the world shed by 12% YoY during the period under review.
Net debt stood at Rs $3,767 million during the quarter. Despite lower payables (down by $568 million), net debt is largely in-line with December 2022 adjusted for reduced factoring.
Mike Frank, CEO, UPL Corporation, said, Destocking continued to weigh down the global agrochemical market. Overall, prices remained stable QoQ in the crop protection business but came off significantly as against with the high base of previous year amid intense postpatent price competition.
However, we did see a pick-up in volumes in Latin America, and a double-digit growth in revenue in the RoW region. Our high margin differentiated and sustainable portfolio continued to outperform as revenue 2 share of this portfolio increased to 37% of crop protection revenue (ex-India) vs 28% last year. Contribution margins too were down only marginally versus last year adjusted for the short-term impact of high-cost inventory liquidation and higher rebates to channel partners.
We continued to implement cost optimization initiatives to align our operations with the new reality, reducing SG&A expenses by 19% YoY in Q3. We are well on track to reduce our SG&A by $100 million in FY25 (from the base of FY23). Going forward, while we are optimistic of a progressively improved performance in Q4FY24 and Q1FY25, we expect normalized business performance from Q2FY25. Our foremost priority is reducing debt. In-line with this, we have also recently announced a rights issue of upto $500 million and are exploring capital raise opportunities at platforms in addition to operational cash flows.
UPL is principally engaged in the agro business of production and sale of agrochemicals, field crops, vegetable seeds and non agro business of production and sale of industrial chemicals, chemical intermediates, speciality chemicals.
The scrip rose 0.68% to settle at Rs 533.50 on Friday, 2 January 2024.
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