India’s Varun Beverages posted a better-than-expected profit for the second quarter on Tuesday, as effective cost management helped cushion the impact of sluggish bottled beverage sales caused by the early arrival of monsoon rains.
The company reported a 3 per cent decline in consolidated volumes during the quarter, attributing it to “abnormally high” rainfall across India.
Domestic volumes fall 7 per cent, revenue slips 2.3 per cent
India’s volumes declined 7 per cent for the PepsiCo bottler. Revenues also fell 2.3 per cent. Despite the sales slump, Varun Beverages managed to tighten its grip on costs. The company’s total expenses declined by nearly 4 per cent compared to last year. Net profit rose 5 per cent on-year to Rs 1,317 crore.
However, International volumes are up 15.1 per cent with South Africa leading with 16.1 per cent growth
Key announcements: Dividend, acquisition, and management change
In its BSE filing, the company announced that Pankaj Madan has been appointed as its new Chief Financial Officer (CFO).
Varun Beverages has acquired a 50 per cent equity stake in Sri Lanka-based Everest Industrial Lanka, a company engaged in manufacturing visi-coolers and related accessories.
In line with its dividend policy, the Board of Directors has approved an interim dividend of 25 per cent of the face value, translating to Rs 0.50 per share. The total cash outflow on this account is estimated at approximately Rs 1,691 million.
Share price of Varun Beverages
The share price of Varun Beverages has seen a significant surge, rising 12.32 per cent over the past month.
Varun Beverages packages and distributes beverages under Pepsi and Tropicana labels, among others. It also sells beverages under its own brands such as “Jive” and “Cream Bell”. The company, which operates in about 10 countries, has been expanding in Africa, citing strong growth opportunities in emerging markets.