Varun Beverages, one of the largest bottlers of PepsiCo products outside the US, on Monday announced its first quarter earnings for the calendar year 2024 with profit at Rs 547.98 crore, up 24.9 per cent in comparison to Rs 438.57 crore during the same period last year. It posted revenue from operations at Rs 4397.98 crore, up 11.3 per cent as against Rs 3952.59 crore during the same quarter the previous year. The company EBITDA stood at Rs 990 crore, up 24 per cent YoY. EBITDA growth was led by higher gross margins and increased realization. This improvement is in-spite of rise in fixed costs associated with the acquisition of new territories and commissioning of new greenfield plants for the season, the company said in a regulatory filing.
Varun Beverages recorded total sales volume growth of 7.2 per cent to 240.2 million cases in Q1 CY2024 from 224.1 million cases in Q1 CY2023. During the quarter, the company said that the India territory grew by 4.4 per cent and International markets by 21.9 per cent, in-spite of delay in the holi festival by 17 days resulting in delayed seasonality cycle. Further, net realization per case increased by 3.5 per cent in Q1 CY2024 to Rs 179.7 on account of improving product mix in India and higher contribution of international markets which have higher realization per case.
Gross margins improved by 385 bps to 56.3 per cent from 52.4 per cent during Q1 CY2024 primarily due to reduced PET prices as well as the focus on reducing sugar content and light-weighting of packaging.
Ravi Jaipuria, Chairman, Varun Beverages Limited, said, “In-spite of delay in the holi festival by 17 days resulting in delayed seasonality cycle, we are pleased to report a reasonably strong overall operational and financial performance in the first quarter of the year. We achieved a consolidated sales revenue growth of 10.9 per cent with a break-up of volume growth of 7.2 per cent and net realization per case growth of 3.5 per cent in Q1, reflecting an improved product mix in India and higher contributions from international markets.”
Furthermore, Varun Beverages Morocco SA, a wholly-owned subsidiary, has entered into an exclusive snacks appointment agreement to manufacture and package Cheetos in Morocco, by May 2025. “This agreement complements our existing distribution of PepsiCo’s snack portfolio, marking another step forward in our strong symbiotic partnership. In nutshell, we have fueled three growth engines which shall gradually and consistently contribute to revenue and profitability growth in the Company. First growth engine is South Africa’s combined territory with Lesotho, Eswatini, Namibia, Botswana, Mozambique and Madagascar. Second growth engine is entry into new territory of DRC where PepsiCo is not present at all as of now, the commercial production here from our new state of the art greenfield plant is expected to start from the next quarter. The third growth engine is entry into snack food production by May 2025 in Morocco,” said Ravi Jaipuria.
For CY2024 season, Varun Beverages commissioned three greenfield production facilities in India:
o Supa, Maharashtra: On Jan 25, 2024, with a total capex outlay of approximately Rs 1000.00 crore.
o Gorakhpur, Uttar Pradesh: On Apr 13, 2024, with a total capex outlay of around Rs 1100 crore, and
o Khordha, Odisha: On Apr 30, 2024, with a total capex outlay of Rs 700 crore
Also, the company has appointed Rajesh Chawla as the chief financial officer, with effect from May 14, 2024. “As recommended by the Nomination and Remuneration Committee and Audit, Risk Management and Ethics Committee at their respective meetings held today, Rajesh Chawla is appointed as a Chief Financial Officer (CFO) and Key Managerial Personnel (KMP) of the Company w.e.f. May 14, 2024 in place of Lalit Malik, who has resigned as CFO & KMP of the Company w.e.f. May 13, 2024,” it said.