United Spirits (USL) reported 18.6% fall in standalone net profit to Rs 136.20 crore in Q4 FY22 from Rs 167.30 crore posted in Q4 FY21.
Net sales rose 9.5% to Rs 2,435.10 crore for the quarter ended 31 March 2022 from Rs 2,224.40 crore recorded in the corresponding period last year. The growth in net sales was driven by resilient consumer demand in off trade and gradual on trade recovery.
Profit before exceptional items and tax surged 15.24% to Rs 372.7 crore in Q4 FY22 from Rs 323.4 crore in Q4 FY21.
The company reported an exceptional item of Rs 173.2 crore in Q4 FY22 on the back of impairment of an inter-company loan provided to Pioneer Distilleries, impairment of fixed assets in certain operationally closed manufacturing units and accelerated charge pertaining to unamortized brand/ license fee.
The IMFL maker said Prestige & Above net sales grew 15.3% benefitting from premiumisation, on-going portfolio renovation and accelerated momentum in states with route to market unlock. Popular net sales grew 1.1% while priority states were broadly flat.
EBITDA improved to Rs 427 crore in Q4 FY22, rising 3.6% year on year in Q4 FY22. Meanwhile, marketing reinvestment rate during the quarter stood at 5.4% of net sales.
On the margins front, gross margin stood at 41.7% in Q4 FY22, declining 200 basis points, impacted by rising inflation partly offset by favourable product mix and productivity savings. EBITDA margin stood at 17.5%, down 99 basis points, driven by gross margin decline partially offset by leverage on operating costs.
Commenting on the results, Hina Nagarajan, chief executive officer (CEO) of United Spirits said, "We have delivered another quarter of consistent top-line and resilient EBITDA performance. The broad-based growth in the Prestige & Above segment demonstrates resilient consumer demand, the strength of our portfolio and focused execution of the strategy by the team. Strong cash flow generation is enabling re-investment in sustainable long-term growth.
"We have just concluded the strategic review of the select Popular brands and the Board has approved the sale and franchising of this portfolio to an unrelated third party. This is a significant move to enable sharpened focus on 'Prestige & Above' and reshape our portfolio to help deliver our growth mission," she added.
Nagarajan further stated, Looking ahead, while we see macroeconomic uncertainty persisting in the near term driven by inflationary headwinds and geopolitical factors, we remain confident in the medium to long-term prospects of our industry. We remain focused on driving productivity and increasing the intensity of our engagement with states on price increases while remaining disciplined in the execution of our strategic priorities, to drive sustainable profitable growth and value for all our stakeholders.
On full year basis, the company recorded a 148% jump in net profit to Rs 769.80 crore on an 18.9% surge in net sales to Rs 9,381.70 crore in FY22 over FY21.
Separately, USL said it will sell about 32 mass-priced brands, including Haywards, Old Tavern, White-Mischief, Honey Bee, Green Label and Romanov, to Singapore headquartered Inbrew for a total cash consideration of Rs 820 crore. The transaction does not include the McDowell's or Director's Special brands, which will be retained by USL.
The deal includes the entire business of these brands such as related contracts, permits, intellectual property rights, associated employees, and a manufacturing facility. In addition, USL and Inbrew have entered into a five-year franchise arrangement for 11 other brands, including Bagpiper and Blue Riband. USL has also granted Inbrew a right to convert the fixed term franchise arrangement into one with perpetual rights to use with a call option to acquire the brands at a pre-agreed consideration.
USL expects to complete the transaction by the end of the quarter ending 30 September 2022.
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 were trading 2.88% higher to Rs 801.10 on the BSE.
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