Biscuit major Britannia Industries on Wednesday saw September-quarter profit beat street estimates amid stable commodity costs. The company reported a 23.1% year-on-year rise in consolidated net profit to Rs 654 crore in Q2, ahead of Bloomberg consensus estimates of Rs 592 crore for the period. However, consolidated revenue growth was sluggish at 3.7% year-on-year to Rs 4,841 crore amid GST transitional issues in Q2. Street estimates had pegged Q2 revenue at Rs 4,951 crore.
The company, which sells ‘Marie Gold’ and ‘Bourbon’ biscuits, reported a 21.8% year-on-year growth in consolidated Ebitda to Rs 955 crore in the second quarter, higher than analysts’ estimates. Bloomberg consensus estimates had pegged Ebitda at Rs 855 crore for the period. Ebitda margins also improved by 290 basis points to 19.7% in the September quarter, compared with 16.8% reported last year. One basis point is one-hundredth of a percentage point.
Commenting on the performance, Varun Berry, Executive Vice-Chairman, MD & CEO, said that Q2 profit growth was also driven by sustained efforts to optimise costs across the value chain. He said that GST-related issues would normalise in Q3.
“The recent GST rate rationalisation will stimulate consumer demand and uplift the overall economic sentiment in the country. But transitional challenges arising from the GST rate changes in the supply chain, trade, and channels had a short-term impact on business,” he said.
Looking ahead, Berry said the company aims to drive the business through volume-led growth, while continuing to strengthen its presence across different geographies with regional, consumer-centric product and distribution strategies. The company, he said, would also ensure competitive pricing and leverage its brand strength to sustain market leadership amid the proliferation of multiple local players in various states and regions.
Berry has been vocal about regional competition in recent quarters, saying that his company will study the market carefully to respond to local competitors. Analysts have indicated that local competition may grow in an environment where commodity prices are benign, putting pressure on established players.
With GST cuts on food and beverage products, including biscuits, many FMCG companies have said that they expect a shift towards organised brands versus loose and unbranded products. Companies are also ramping up distribution, especially in rural areas, to capitalise on the boom. Britannia has increased direct distribution in recent years and has also enhanced production capacity in focus markets in the north.
Britannia names ex-Birla Opus chief Rakshit Hargave as CEO
FMCG veteran Rakshit Hargave will join Britannia Industries as its CEO, effective December 15. The company said on Wednesday that its board of directors had approved Hargave’s appointment for a period of five years. Hargave is currently serving his notice period at Birla Opus, where he was CEO. In an exchange filing on Wednesday, Birla Opus said that Hargave will exit the company on December 5.
Hargave, who joined Birla Opus, owned by Grasim Industries, in November 2021, has led its growth in recent years, driving the company to the number two position in decorative paints, with a 24% capacity share, following the launch of its sixth plant last month in Kharagpur, West Bengal.