Heritage Foods Q1 Results: Net Profit Plummets 38% As Margin Shrinks

Heritage Foods Ltd. reported a sharp decline in first-quarter profitability even as revenue hit a record high, with elevated milk procurement costs offsetting strong demand for value-added dairy products.

Consolidated net profit fell 37.9% year-on-year to Rs 25.2 crore in the quarter ended June, compared with Rs 40.6 crore a year earlier. Revenue, however, rose 17.7% to Rs 1,338 crore from Rs 1,137 crore, marking the company's highest-ever quarterly revenue. EBITDA declined 16.3% to Rs 61.8 crore, while EBITDA margin narrowed to 4.6% from 6.5% a year ago.

In a press release, the dairy company attributed the pressure on margins to persistently high milk procurement costs, saying it chose to prioritise supply continuity and farmer engagement over short-term profitability amid industry-wide milk inflation.

Heritage also completed the acquisition of the remaining 5.6% stake in Heritage Novandie Foods Ltd. (HNFL), making the business a wholly owned subsidiary as it sharpens its focus on premium, value-added dairy products.

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"We are pleased to report another quarter of strong execution, with Heritage Foods delivering record quarterly revenue... while our value-added products portfolio reached an all-time high contribution of 44% of revenues," Executive Director Brahmani Nara said in a post earning remarks.

Brahmani Nara added that higher milk procurement costs temporarily affected profitability, but investments in procurement, innovation, premiumisation and distribution would support sustainable long-term growth as industry conditions normalise.

The company said its value-added products business continued to outperform, with categories such as paneer, curd, buttermilk, lassi and ice cream posting strong volume growth during the quarter.

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