Titan Company lowered guidance of its jewellery business for the rest of the year due to weak consumer sentiment and high gold prices.
The company on Tuesday said that its consolidated net profit fell 1% to Rs 302.79 crore on a 1.7% rise in net sales to Rs 4600.71 crore in Q2 September 2019 over Q2 September 2018.Standalone net profit rose 1.83% to Rs 320.16 crore on 0.4% rise in net sales to Rs 4,370.82 crore in Q2 September 2019 over Q2 September 2018.
Shares of Titan Company slumped 8.09% to trade at Rs 1180. On the BSE, 3.42 lakh shares were traded in the counter so far compared with average daily volumes of 1.30 lakh shares in the past two weeks. The stock hit a high of Rs 1200.2 and a low of Rs 1160 so far during the day.
Revenue growth during the quarter was impacted substantially by the decline in the revenues of the jewellery division due to the sudden spike in gold prices in June 2019. Jewellery segment revenue declined by 1.5% in Q2. After a sudden surge in gold prices in mid-June, there was a considerable decline in sales in July. Higher level of promotion and schemes, led to strong growth in the months of August and September.
The company lowered its jewellery sales growth guidance to 11-13% for the second half of 2019-20 from 20% earlier, the company said in its conference call Tuesday.
Standalone profit before tax (PBT) fell 3.8% to Rs 429 crore in Q2 September 2019 as against Rs 446 crore in Q2 September 2018. Flat top line and higher costs affected profit before tax (PBT) growth and margin which, at 9.7%, was lower by 40bps YoY. Employee costs were much higher due to effect of wage settlement and higher provisions for leave pay arising out of lower interest rates.
The Watches business revenue grew 6.4% on YoY basis. The Eyewear business revenue grew by 28.5% in Q2 2019. Other segments of the company comprising accessories, fragrances and Indian dress wear grew by 33.2% in Q2 2019 recording an income of Rs.44 crores as against Rs 33 crore Q2 2018.
Commenting on company's Q2 performance, CK Venkataraman, managing director said, "The company has done well across all its businesses in the second quarter given the subdued market and consumer sentiments. The Jewellery business has done better than most players in the industry. Both the Watches as well as Eyewear business have recorded good growth. For the second half of FY 20 we are gearing up on all fronts to stimulate demand with innovative campaigns for new exclusive collections that are lined up for launch across all our brands".
The company added 73 stores with a retail space of 103k square feet in YTD'20, on net basis.
Bhaskar Bhat retired after serving the company since inception with the 17 years as its Managing Director. C K Venkatraman, who has been in the role of CEO of Jewellery business since 2005, succeeded him from 1st Oct. Bhaskar Bhat has been re-appointed as a non-executive non-independent director on board effective 1st October 2019.
Titan Company is engaged in offering watches, jewelry and others. The company's segments include watches, jewellery, eyewear and others.
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