United Spirits (USL), the country’s largest spirits player, today reported a tepid seven per cent rise in second-quarter net profit at Rs 74.6 crore, bogged down by financing its high-cost debt. Riding on sales growth of 16 per cent, revenue rose 26 per cent to Rs 1,366 crore. The flagship spirits company of the United Breweries Group sold 26.6 million cases during the three months to September. One case carries nine litres or 12 bottles of 750 ml.
USL said the costs of refinancing the Whyte & Mackay (W&M) loan during the second half of 2010-11 and the increase in working capital due to expansion in business pushed the interest costs by Rs 23.2 crore to Rs 98.3 crore. It has a debt of around Rs 5,000 crore, with a leverage of close to two times.
In 2007, USL had acquired Scotland-based marquee scotch major W&M for a little over Rs 5,000 crore. Given the fact that the second quarter is traditionally a weak one during a financial year, USL was able to extract more revenues from a decent rise in sales volume on the back of 20 per cent growth in its premium segments and price increases in various markets.
“Spirit costs during the quarter were marginally lower than the previous quarter. The trends for the rest of the year would be more apparent after the onset of the crushing in November and December," the company said in a statement.
Operating profit, at Rs 230.4 crore, represented a 22 per cent increase over the comparable period of the previous financial year. Operating margin remained flat at 17 per cent.
