Liquor major United Spirits Limited (USL) registered a strong growth of 86% in its net profit at Rs 153.1 crore on a standalone basis for the second quarter ended September 30, 2017 boosted by huge reduction in the employee benefit expenses and lower interest costs.
Liquor major United Spirits Limited (USL) registered a strong growth of 86% in its net profit at Rs 153.1 crore on a standalone basis for the second quarter ended September 30, 2017 boosted by huge reduction in the employee benefit expenses and lower interest costs. The company’s net profit for the July-September period in the last fiscal stood at Rs 82.5 crore. The total revenue of the UK-based Diageo Plc-owned company stood at Rs 6,245 crore registering a growth of 3.2% when compared to the same period last year. The company attributed tepid revenue growth to the impact of liquor sales on highways and the one off impact of operating model changes.The interest cost for the quarter was R66 crore, lower by 26% driven by favourable rates and mix of debt. “In the second quarter we have delivered strong underlying net sales growth of 4% driven by 12% growth in the Prestige & Above segment, despite the impact of the highway ban. Additionally, we have delivered expanded margins despite the impact of GST,” said Anand Kripalu,CEO & MD, United Spirits.
However, the company feels that with the recent Supreme Court clarification on the highway ban, it has seen reopening of outlets in September. Also, it expects the impact of the highway ban to continue to decrease and the business to normalize by end of the third quarter. The government has kept liquor out of Goods and Services Tax (GST) however, analyst had predicted impact of GST on performance of USL as the raw materials cost has gone up due to the new tax regime. “Despite the implementation of GST which has resulted in stranded taxes, I am pleased that we have been able to deliver a robust underlying gross margin improvement in both the second quarter and first half, enabled by our accelerated productivity initiatives, price increases in select states, and our continued focus on premiumisation,” Kripalu said.
On a segment basis the company’s Prestige & Above segment which represents 48% of total volumes and 63% of total net sales reported a net sales growth of 10%. The Popular segment which represents 52% of total volumes and 35% of total net sales witnessed a decline in volume by 28% and net sales by 22% in the July-September period. The company’s famous brands include Royal Challenge, Antiquity, Bagpiper, Signature, Director’s Special Whisky and Black Dog Scotch whisky. During Thursday’s trade on the Bombay Stock Exchange the shares USL closed at Rs 2575.2 per share rising by 1.41%.