Adani Wilmar FY23 Results: Revenue Jumps 7.4% To Rs 58,185 Crore

The consumer goods business of Adani Group, Adani Wilmar Ltd., saw revenue rise 7.4% to Rs 58,185 crore with underlying volume growth of 14%, according to its earnings update filed with the stock exchanges.

Profit for the fiscal, however, stood at Rs 582 crore as against Rs 804 crore a year ago, due to the fall in edible oil prices.

The impact of decline in edible oil prices was steep in the fourth quarter.

Profit of the owner of the 'Fortune' brand fell 60% to Rs 93.61 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 281.3 crore consensus estimate of analysts tracked by Bloomberg.

A combination of factors impacted profitability during the quarter, the company said. This includes a decline in edible oil prices, which led to high-cost inventory, a tariff rate quota disparity putting pressure on soyabean oil margins; inflation in logistics and packaging costs; and higher finance costs on the back of a hike in Fed rates.

Further, its wholly owned subsidiary in Bangladesh made a loss of Rs 12 crore in Q4 due to price caps by the government on edible oils, local currency-related issues, and the unavailability of a counter-party for forex hedging, resulting in lower consolidated profits.

Adani Wilmar Q4 Highlights (YoY)

• Revenue from operations dipped 7% to Rs 13,872.6 crore as compared with the Rs 16,011.7 crore estimate.

• Operating profit fell 16% to Rs 358.77 crore against a forecast of Rs 533.2 crore.

• Margin stood at 2.6% versus 2.9%. Analysts had projected the metric at 3.3%.

• Revenue from the edible oil business fell 12.78% to Rs 10,790 crore, while volumes remained flat at 0.88 million metric tonne.

• The food business' revenue jumped 53% to Rs 1,159 crore, while volumes grew 38.8% to 0.25 million metric tonne.

• The industry essentials segment saw a 7.6% rise in revenue to Rs 1,924 crore, with volume growth of 55% over the previous year.

• The company registered volume growth of 15% during the quarter, as compared with 16% in the previous quarter.

The first half of the fiscal ended March 2023 witnessed multiple macro events causing high volatility in edible oil prices, with record high prices in the first quarter and subsequent crash of prices in the second quarter, according to the company. In the second half, the prices have gradually declined, leading to better demand trends.

"Our margins during the quarter and full year got impacted by high cost inventory in a falling edible oil price environment, inflation impact on our operational costs and an increase in interest costs due to rate hikes," said the company's Managing Director and Chief Executive Officer Angshu Mallick.

However, Adani Wilmar has been able to grow its sales on an annual basis, driven by scaling up of products in a large addressable market. In FY23, the company has crossed the milestone of five million metric tonne of sales.

In terms of the food business, Mallick said that it has closed the financial year 2023 with Rs 4,000 crore of revenue, up 55% in value and with a volume growth of 39% over the previous year. Both wheat flour and rice businesses crossed Rs 1,000 crore in revenue during the fiscal. The company expects the growth to continue in both the products for many years, given the large headroom in the kitchen essential products segment.

"Food prices also witnessed high inflation in H1, which started cooling off in the second half," according to the company.

Alternate channels such as e-commerce, modern trade and e-B2B serving general trade have been growing at a faster clip, the company said. In FY23, it has clocked a growth of 23% for the combined portfolio of oil and foods. During the year, these channels contributed Rs 2,700 crore to sales.

Distribution expansion, gaining share in underindexed markets and margin improvement will be key priorities in the consumer pack segment for both edible oil and food businesses. The company sees scope in the hotels, restaurant and catering industry as well as exports and is working on plans to exploit these opportunities.

Shares of Adani Wilmar Ltd. declined 3.24% to Rs 402 apiece after the results were announced, as compared with a 0.35% decline in the benchmark Nifty 50.

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