Britannia Q1 Results: Profit Falls 11% Sequentially As Rising Input Costs Bite

Britannia Industries Ltd.’s profit declined, missing estimates, amid rising input costs.

Net profit of the maker of Good Day and Tiger biscuits fell 11% sequentially to Rs 337.4 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 407.7-crore consensus estimate of analysts tracked by Bloomberg.

Key Highlights (QoQ)

• Revenue rose 4% to Rs 3,701 crore, against the estimated Rs 3,822 crore.

• Operating profit fell 9% to Rs 500.7 crore. Analysts had pegged it at Rs 597.28 crore.

• Operating margin contracted to 13.5% from 15.5%, missing the consensus forecast of 15.6%.

• Cost of raw materials consumed rose 5.4% to Rs 1,959.35 crore.

“Global factors continued to impact the economy, which led to a surge in inflation during the quarter,” Varun Berry, the company’s managing director, said. Certain commodities, relevant to bakery business, such as wheat and industrial fuel witnessed steep sequential inflation during the quarter ranging between 15% and 20%.

“While we actioned necessary price increases to cover this, the full impact of price correction should reflect in the ensuing quarter,” said Berry. Also, a drop in prices of some of the commodities like palm oil and crude, along with intensified cost efficiency programme, should help improve profitability in the coming quarters, he said.

The company has added 1,000 rural preferred dealers during the quarter, taking the total count to 27,000. This is reflected in rural market share gain being better at 1.5 times than urban, the company said.

In comparison, among the consumer goods firms on the Nifty 50 that have announced their earnings for the quarter ended June, Nestle India Ltd.’s profit also fell amid higher costs, while revenue grew. Hindustan Unilever Ltd. continued to see pressure on margin even as its net profit rose, driven by price hikes. For ITC Ltd., inflationary headwinds manifested in subdued consumption expenditure with volumes coming under pressure.

Shares of Britannia Industries closed 0.23% higher after the results were announced against a flat benchmark Nifty 50.