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Business News/ Companies / Company-results/  United Breweries posts 80.6% jump in Q3 net profit
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United Breweries posts 80.6% jump in Q3 net profit

Net profit rises to Rs72.12 crore from Rs39.94 crore a year ago on the back of favourable input costs

Total income at the maker of Kingfisher beer rose 15.65% to Rs1,157 crore from Rs1,000.4 crore in the same quarter in the previous year, on higher demand for strong beer. Photo: Pradeep Gaur/MintPremium
Total income at the maker of Kingfisher beer rose 15.65% to Rs1,157 crore from Rs1,000.4 crore in the same quarter in the previous year, on higher demand for strong beer.
Photo: Pradeep Gaur/Mint

United Breweries Ltd, India’s largest brewer, on Tuesday said net profit in the December quarter rose 80.57% to 72.12 crore from 39.94 crore a year ago on account of favourable input costs, beating Street estimates by a wide margin.

Total income at the maker of Kingfisher beer rose 15.65% to 1,157 crore from 1,000.4 crore in the same quarter in the previous year, on higher demand for strong beer.

“The quarter ended 31st December witnessed extraordinary growth both in comparison to the corresponding quarter and the previous year, with volume growth emerging from southern markets of Karnataka, Kerala and Telangana," the company said in a BSE filing.

A poll of seven brokerages by Bloomberg had pegged net sales at 1,098.30 crore and net profit at 47.96 crore.

Overall volumes in the beer industry surged 13% during the quarter. For United Breweries—which makes more than half of all beer sold in India—this demand translated to 3% growth in volumes for the nine months ended 31 December.

Growth rate for the beer industry in the first six months of 2015-16 dipped by a percentage point, impacting volumes at United Breweries in the same period. But in the December quarter, the company bucked the trend.

Gross margins for the nine months ending 31 December were up by 135 basis points as stable input prices and a favourable market mix helped boosted margins. A basis point is one-hundredth of a percentage point.

Depreciation and amortization costs saw a 16.4% jump to 61.5 crore on account of “initiatives to build capacity to cater to expected future growth", UB added. The company’s recently acquired brewery in Rajasthan commended operations in the quarter.

According to an analyst, UB benefited from discretionary spends during the festive season with the industry witnessing solid demand during the December quarter.

“The numbers have emerged from a strong volume growth in the market," said Abneesh Roy, associate director (institutional equities) at Edelweiss Securities Ltd.

“UB has grown faster than the industry," he added. The company, according to him, benefitted from favourable commodity costs such as glass prices.

Shares of the company closed 3.7% higher at 808 on the BSE, days after touching a 52-week low of 760. The benchmark Sensex on Tuesday closed 1.15% lower at 24,539 points.

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ABOUT THE AUTHOR
Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 03 Feb 2016, 12:38 AM IST
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