TheNFAPost Podcast
4

Bengaluru, NFAPost: Britannia Industries, largest biscuit maker in India, reported a massive 118.25% year-on-year increase in consolidated profit for the quarter ended June 2020, driven by strong revenue and operational growth.

The exponential growth of the company comes at a time when Covid-19 pandemic has really toppled the landscape of all business verticals.

While profit increased to Rs 542.68 crore during the June quarter 2020, compared with Rs 248.64 crore in the corresponding period last fiscal, the company’s revenue from operations rose 26.6% year-on-year to Rs 3,514.35 crore in June quarter 2020.

Commenting on the company performance, Britannia Managing Director Varun Berry said given the dynamic nature of the pandemic and associated uncertainty, the company was quick to resort to cost efficiencies through extraction of supply chain efficiencies, reduction in wastages and fixed costs leverage.

Higher market demand

“We also rationalised the media spends considering the constraints of inventories due to higher market demand. These measures helped us improve the shape of our business and record a massive increase in operating profit during the quarter,” said Britannia Managing Director Varun Berry.

According to Arvian Research strong demand for its cookies, cakes and biscuits helped the company draw significant sales as more Indian households turned to branded packaged foods during India’s turbulent lockdown.

“Britannia’s stellar performance comes notwithstanding several headwinds faced by packaged consumer goods companies as India imposed strict lockdown. Even though there was limited relaxation, the company had to face the severe disruption of supplies. But the company managed to grip the market backed by its strong marketing strategies and supply chain ecosystem,” said an analyst from Arvian Research.

Domestic volume growth

Britannia’s domestic volume growth at 22% in June quarter while the last quarter in the same period last year was at 3%. The company’s consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) registered sharp growth of 82% year-on-year to Rs 717 crore and margin expanded 640bps YoY to 21% in the quarter ended June 2020.

Numbers beat analysts’ estimates on all parameters. Profit was expected at Rs 395 crore on revenue of Rs 3,255 crore and EBITDA was estimated at Rs 516 crore with margin at 15.9% for the quarter.

Britannia took the risk to launch ‘Winkin Cow Lassi’ and a Rs 5 Layer cake pack to expand its reach.

“All the adjacent businesses too delivered a healthy profitable growth. On the cost front, we witnessed moderate inflation in the prices of key raw materials and expect the prices to be stable going forward given the positive outlook on monsoon & harvest,” Varun Berry said.

During the quarter, the company launched its ‘Winkin Cow Lassi’ and rolled out a ₹5 Layer Cake pack to expand reach.

Even though Covid-19 pandemic impacted industry verticals across, FMCG companies, especially in the packaged food industry, will be benefitting as citizens are closeted at home. According to Arvian Research analysts, companies like Nestle, ITC, HUL and Dabur India will get the benefit.

LEAVE A REPLY

Please enter your comment!
Please enter your name here