Bangalore: India’s No. 2 biscuit maker Britannia Industries Ltd reported a better-than-expected 11% rise in net profit to Rs.62.1 crore for the December quarter, helped by a strong growth in sales.
The maker of Good Day and Tiger biscuits said total income for the quarter ended 31 December rose 16.4% to Rs.1,607.9 crore.
Analysts polled by Bloomberg were expecting a quarterly profit of Rs.60.95 crore on sales of Rs.1,416 crore.
Britannia, like other biscuit makers such as Parle Products Pvt. Ltd and ITC Foods, has been hurt by slowing demand. Increased prices and a weak economy have hurt sales volumes at all biscuit companies.
However, Britannia’s sales growth in the latest quarter shows demand may be recovering. Revenue growth was significantly higher than the 11% and 9.5% reported in the preceding quarters this fiscal year.
Of the roughly 17% increase in sales in the quarter, 5-5.5% came from higher volumes, 6-7% from increased prices, with a better product mix contributing the rest, managing director Vinita Bali said in an interview.
“The focused marketing campaigns of our core brands helped drive sales growth. We had a big campaign behind Good Day’s 25th anniversary as well as for Tiger and other core brands. We got the execution of our strategy right,” Bali said.
Advertising expenses in the third quarter rose 40.3% annually to Rs.122.8 crore. Among other measures, Britannia signed actor Salman Khan to promote its Tiger brand and re-positioned its glucose biscuits as health biscuits.
“The results were more or less in line with what we expected. Their volume growth has been slightly muted,” said V. Srinivasan, analyst at Angel Broking.
Higher prices in the quarter were partly due to standard pack sizes. From 1 November, consumer product companies were asked to sell 19 products, including bread, biscuits, and soap, in specified standard weights and sizes only. The move was aimed at helping consumers compare prices and stop companies from managing rising input costs by cutting pack sizes.
Industry executives have said that the new standard pack sizes generally resulted in a small price increase.
Shares of Britannia rose slightly to Rs.465 on BSE on Monday, while the benchmark Sensex fell 0.12% to 19,460.57 points.