Textile manufacturer Arvind posted a net profit of 101.6 crore for the April-June quarter against a net loss of11.42 crore in the corresponding quarter last year. The company’s sales rose 64% year-on-year (y-o-y) during the quarter to 2,352 crore on the back of improved demand. Operating margins also improved 170 basis points to 9.4%. However, margins could have risen more had it not been for the 55% y-o-y increase in total expenses during the quarter to Rs 2,234.6.
The total expenses grew majorly because of high raw material costs during the quarter which rose 82% y-o-y due to high cotton prices. The company said that cotton prices have now started declining and should translate into some softening of retail prices, and help support demand.
The company expects Q2 to be marginally muted compared to Q1 and it will depend on the recessionary global markets and commodity prices going ahead. For export markets, the company is already seeing reduced volumes global brands and retailers have started postponing purchases to reduce their inventory and because of recessionary fears.
“Consumer demand in the US is showing initial signs of slowing down in response to interest rate hikes. Also, the US brands and retailers have started inventory correction and postponement of buying; though we have not seen cancellations,” the company said.
On the contrary, domestic retail demand has been strong, especially in the mid to mid-premium segments, although there is temporary buying deferment in the trade channel in anticipation of lower commodity prices, the company pointed out. For the April-June quarter, the company’s textiles segment grew 68% as a result of both volume growth and price realisation, and the advanced material segment clock.