Adani Wilmar Expects 25% Volume Growth In Q1 On Sustained Demand

Adani Wilmar Ltd. sustained demand for its food and edible oil products and estimated its volume to increase 25% in the June quarter.

Growth was aided by an uptick in sales of branded food products as well as price cuts that made cooking oil cheaper by more than 50% from a year earlier, the consumer goods business of Asia's richest man Gautam Adani said, in its quarterly business update filed with the bourses.

The food business grew 30% over the previous year to surpass the Rs 1,000 crore turnover mark during the quarter on a standalone basis. Volume grew 20%, aided by a conscious shift in consumer demand from unbranded to branded products, it said.

"The majority of our branded food products recorded a volume increase of more than 25% in Q1, with many of the new products that were launched in the market in the last one to two years, witnessing much faster growth."

Soaps—under the Alife brand—which was launched in FY20, is now clocking annual revenue of more than Rs 100 crore.

In the edible oil business, the owner of Fortune brand said it witnessed a 25% increase in volume, partly due to a weak base. The base quarter demand was disrupted by high edible oil prices with the onset of the Russia-Ukraine conflict. But thanks to lower prices, the consumer demand for edible oil in both urban and rural markets has also been strong during the quarter with volume having grown sequentially, the company said.

Edible oil prices declined 5-20% in the first quarter over the quarter ended March, before recovering towards June-end, according to Adani Wilmar. This was due to a combination of factors, including decline in demand in developed economies, easing supply at the Black Sea region as well as robust production of oilseeds globally.

However, the high cost inventory in an environment of falling prices has exerted pressure on profitability throughout the previous fiscal and this trend persisted during Q1 as well, the company said.

As for the industry essential business, the company said volume grew 20% in the first quarter. "The strong volume growth was primarily driven by good crush operations and exports of animal feed products," it said.

Revenue in the segment, however, fell 15% due to steep correction in prices of oleo and castor products which together comprise 70% of revenue. Exports of castor were also impacted as demand from European markets remained tepid due to the economic slowdown in the region.

On input costs, Adani Wilmar said wheat prices have gone up during the quarter, prompting the government to release wheat in the open market from its stock to cool down prices. The ban on wheat export continues.

The unseasonal rains and hailstorms in key wheat producing states have also adversely impacted the crop quality. "Its impact on the quantity of output is yet to be ascertained by government agencies."

Shares of Adani Wilmar closed 0.2% lower on the BSE as compared with a flat benchmark NSE Nifty50. The update was released after market hours.

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