The liquor major's consolidated net profit stood at Rs 50.30 crore in Q1 June 2021 (Q1 FY22) compared with net loss of Rs 246.60 crore in Q1 June 2020 (Q1 FY21).
Reported net sales increased after the company witnessed a healthy momentum in demand for the first three weeks of April 2021 until the second COVID-19 surge in India hit alarming levels and led to resumption of lockdown in various states. The restrictions on on-premise establishments and consumer behavioural shifts impacted the balance between the on- and off-premise occasion in most markets.
Revenue from operations soared 66.8% to Rs 1721.70 crore in Q1 FY22 from Rs 1031.90 crore in Q1 FY21. Pre-tax profit was at Rs 51.30 crore in Q1 FY22 as against a pre-tax loss of Rs 291.50 crore in Q1 FY21.
On a standalone basis, the net profit stood at Rs 69 crore in Q1 FY22 compared with net loss of Rs 215 crore in Q1 FY21. Net sales rose 57% to Rs 1,615 crore during the period under review.
EBITDA was at Rs 168 crore in Q1 FY22 as against Rs (78) crore in Q1 FY21. EBITDA margin improved to 10.4% during the quarter as compared to (7.5)% during Q1 June 2020. Profit margin stood at (4.3)% in Q1 June 2021 over (21)% in Q1 June 2020. Interest cost stood at Rs 20 crore, falling 60% driven by debt reduction and lower interest rates.
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The gross profit increase of Rs 291 crore was predominantly volume led, aided by benign commodity environment, productivity initiatives and a deflated base of Q1 FY21 due to the COVID-19 slump. Reported staff cost was at 11.6% of sales, slipping while other overheads were at 17.4%, down 1,504 bps due to cost consciousness drive and relatively better operating leverage. Controlled and effective marketing investments were limited to activites which could give tangible results amidst state wide lockdowns. On-premise channel activation stood impacted due to weak and regulated on-trade environment.
The Prestige & Above category accounted for 66.7% of net sales during the quarter, rising 0.71 ppts. Prestige & Above segment net sales increased 58% during the quarter, led by a low comparative. Meanwhile, the Popular segment accounted for 31.2% of net sales during the quarter, growing 0.70 ppt. The Popular segment net sales increased 60% primarily due to weaker comparatives. Net sales of Popular segment in Priority states increased 50% during the quarter.
Overall volume soared 61% with expansion of 62% in Popular segment, marginally outpacing Prestige & Above segment volume expansion of 60%. Underlying price/mix for the quarter was adverse 4.19%, mainly due to impacted momentum in Scotch performance and adverse Brand/ State mix.
Hina Nagarajan, the chief executive officer (CEO) of United Spirits, commented on the quarter ended 30 June 2021, stating: "In the midst of the severe COVID-19 second wave that swept the country during the quarter, our top-most priority was the safety of our employees and associates while supporting the eco-system of customers, partners and communities. The company and its parent company, Diageo plc, committed Rs 10 crore and Rs 35 crore respectively (cumulatively Rs 45 crore) in this quarter to support India's long term public healthcare infrastructure. The company provided oxygen concentrators and other medical supplies and is in the process of creating mini hospitals in critical districts."
"We have delivered a resilient performance on the back of our operational agility and the intrinsic strength of our portfolio as we managed through the challenges of localized and asynchronized state lockdowns. The company was back to full operations as we exited the quarter. Looking forward, with the drop in COVID-19 positivity rates and steady increase in the vaccination coverage, we expect the recovery momentum to accelerate. We remain focused on stimulating demand through our renovation, innovation, and other category growth initiatives. The embedded discipline during the first two waves of the pandemic has enabled the Company to prepare for short-term disruptions and Emerge Stronger from the crisis."
Meanwhile, the board of directors of United Spirits (USL) approved sale of equity shares and CCPS held in its associate company, Hip Bar to Prasanna Natarajan for consideration of Rs 52 lakh. The transaction will complete on or before 31 October 2021. Upon completion of the above sale, HipBar will cease to be an associate company of USL.
United Spirits manufactures and distributes a variety of alcohols and spirits, including whiskey, brandy and rum. The company also manufactures Indian-made foreign liquor brands.
Shares of United Spirits fell 1.97% to Rs 670 on BSE. The scrip hits 52-week high of Rs 690 in morning trade.
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