Britannia Industries Ltd.'s quarterly profit declined missing estimates amid a spike in inflation in palm oil, industrial fuel and packaging.
Net profit attributable to shareholders fell 1% sequentially to Rs 384.22 crore in the quarter ended September, the maker of Good Day and Tiger biscuits said in an exchange filing. That compares with the Rs 433.9-crore consensus estimate of analysts tracked by Bloomberg.
Key Highlights (QoQ)
Revenue rose 6% to Rs 3,607.37 crore, against the estimated Rs 3,618.9 crore.
Operating profit increased 1% to Rs 558.33 crore.
Operating margin contracted to 15.5% from 16.3%, compared with the estimated 17.18%.
Cost of raw materials rose 1.72% to Rs 1,914.72 crore.
Year-on-year, net profit and operating profit declined 23% and 17.3%, respectively. Gross margin dipped 485 basis points as cost of materials increased 8% and staff expenses swelled 14.2%.
Britannia has been facing high inflation and supply-led constraints for various raw materials. “During the quarter, the impact of the second wave of Covid-19 started receding, and the economic activity started picking up. However, inflationary trends remained rampant around the globe, across sectors,” Varun Berry, managing director, was quoted as saying in the filing. “We are witnessing unprecedented inflation in market prices of palm oil at 54%, industrial fuel at 35% and packaging materials at 30% leading to an overall inflation in the quarter of 14%.”
The fast-moving consumer goods company said it has been able to partially mitigate the impact through necessary price hikes across the portfolio. “We are confident that our resilient brands and strategic growth initiatives will hold us on a path of profitable share gain in the future as well,” Berry said.
Its peers in the packaged goods segment such as Nestle India Ltd. and Hindustan Unilever Ltd. have fared better in terms of margin. Both companies have seen their profit rise during the reported quarter. But India's largest consumer goods maker termed the input cost inflation as unprecedented.
Shares of Britannia closed 1.6% higher on BSE before the results were announced.
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