Varun Beverages (VBL) tumbled 4.44% to Rs 901.70 after the company reported a consolidated net loss of Rs 7.24 crore in Q4 December 2020 as against a net loss of Rs 53.95 crore in Q4 December 2019.
The company said that losses had reduced significantly due to strong performance in international territories. Net revenues rose by 9.1% to Rs 1,330.89 crore while total expenses increased by 2.6% to Rs 1,355.33 crore in the fourth quarter as compared to the same period last year.
Total sales volumes (organic) were up by 5.7% year-on-year (YoY) at 8.71 crore cases in Q4 2020. EBITDA during the quarter improved by 48.8% to Rs 172.23 crore from Rs 115.75 crore in the corresponding period last fiscal. EBITDA margins improved by 346 bps in Q4 2020 as compared to Q4 2019.
"We were able to sustain certain cost-optimization measures implemented during the pandemic that enabled us to report improved profitability in Q3 & Q4," VBL said in a statement.
The company reported a pre-tax loss of Rs 18.86 crore in Q4 December 2020 as against a pre-tax loss of Rs 64.16 crore in Q4 December 2019. It wrote back taxes aggregating to Rs 11.62 crore in the December 2020 quarter.
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VBL reported 24.3% fall in consolidated net profit to Rs 357.27 crore on a 9.5% decline in net revenues to Rs 6450.14 crore in the year ended on 31 December 2020 as compared to the year ended on 31 December 2019.
With faster-than-expected recovery witnessed across the territories, VBL managed to close the pandemic-hit year with a decline of 9.5% in revenue from operations in CY 2020 as against a 41.6% revenue decline during its peak quarter of Q2 2020, the company said in a statement.
It further said that for current year (CY) 2020, total sales volumes declined by 13.7% YoY to 425.3 million cases and organic sales volumes declined by 20.8% primarily because of decline in Q2 2020 where volumes declined by 46.4% due to lockdown restrictions imposed by Government of India.
Realization per case improved by approximately 4.8% in CY 2020 due to favourable mix and improvement in realization in the international markets. CSD constituted 72.6%, Juice 6.3% and packaged drinking water 21.1% of total sales volumes in CY 2020.
EBITDA decreased by 17% to Rs. 1,201.87 crore in CY2020 from Rs. 1,447.65 crore in CY 2019. Gross margins improved by 231 bps in CY 2020 primarily due to favourable PET chips prices (approximately 12.5% decline) and higher mix of CSD. Depreciation increased by 8.2% in CY 2020 as the effect of acquisition of South & West India sub-territory was w.e.f. 1 May 2019 in the base year.
Finance cost declined by 9.2% in CY 2020 due to repayment of debt as well as lower average cost of borrowing. Net debt stood at Rs 3,015.8 crore as on 31 December 2020 as against Rs 3,246.1 crore as on 31 December 2019.
During CY 2020, net capex included approximately Rs 320 crore primarily towards brownfield expansion at certain plants in India, Zimbabwe and acquisition of assets for value added dairy beverages in Zambia, approximately Rs 200 crore for expansion primarily at Bharuch, Sricity and Tirunelveli plants from investment fund received from PepsiCo in CY 2019 and approximately Rs 40 crore towards capitalization on implementation of Ind AS116 for leases.
The company's working capital days increased marginally to approximately 31 days as on 31 December 2020, due to lower sales volumes.
Commenting on the performance for Q4 & CY 2020, Ravi Jaipuria, Chairman - Varun Beverages, said: "We have ended the year 2020 on a steady note despite unprecedented macro-economic challenges. The spread of the COVID-19 pandemic in early March 2020 caused significant disruptions in our business operations, particularly during the seasonally strong period of April to June quarter. With overall economic activity picking-up sharply across the country, there is an improved consumption trend being witnessed on a month-over-month basis. This bodes well for all our product categories over the medium-to-longer term."
Varun Beverages is a key player in beverage industry and one of the largest franchisee of PepsiCo in the world (outside USA). The company produces and distributes a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo. VBL has been granted franchises for various PepsiCo products across 27 States and 7 Union Territories in India along with franchise for territories of Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe.
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