Titan Q2 profit rises 23.5% on improved margins, cost-cutting measures
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Bengaluru: Titan Co Ltd, a Tata group firm that makes watches and jewellery, reported a 23.51% year-on-year increase in net profit to Rs180.76 crore in the September quarter as it benefited from cost cuts, improved margins and festive season sales.
Titan’s revenue fell marginally by 0.1% to Rs2,659.83 crore during the period.
In April, Titan announced a voluntary retirement scheme for employees who had either finished 10 years of service or were above 40 years of age in a bid to improve productivity and cut costs. The move appears to have paid off in terms of profit growth.
“Gross margins were very good during the quarter. We are at 42% studded ratio and that added to the margin substantially. Another fact is also that in plain gold jewellery our margins were significantly higher thanks to the higher gold prices,” senior executives at Titan including CEO (jewellery) C.K. Venkataraman, told analysts in a conference call on Friday.
Still, both net profit and sales missed Street expectations of Rs192.20 crore and Rs 3,040.20 crore, respectively, based on a survey of analysts by Bloomberg.
Net sales at its jewellery and eye-wear segments, and other businesses, including precision engineering and accessories, grew while revenue from watches declined from year-ago period.
“This was an extremely good quarter for the company, with respect to profit. All businesses of the firm recorded profits in the quarter. The jewellery business had an extremely good studded jewellery activation and the watches business launched its second smart watch, JUXT Pro,” Bhaskar Bhat, managing director of Titan, said in a BSE filing on Friday.
In a BSE filing in early October, Titan had warned that studded jewellery sales had surpassed its expectations in the September quarter but volatile gold prices and low consumer confidence had dented sales of gold jewellery.
That, perhaps, explains why revenue from the company’s jewellery segment, run under the Tanishq brand, grew just 0.24% year-on-year in the quarter to Rs1,987.51 crore.
Revenue from this segment typically accounts for a major chunk of overall sales.
“For the Dussehra to Diwali festive period, Tanishq registered a growth of 39% over last year,” Bhat said in the filing.
On Friday, Titan’s shares ended at Rs368.50 on the BSE, down 2.16% from the previous close while India’s benchmark Sensex Index fell 0.57% to close at 27274.15 points.