Adani Wilmar Q1 Results: Net loss at ₹79 crore, EBITDA down 71%; food, FMCG segment revenue up 28% YoY | Mint
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Business News/ Companies / Company Results/  Adani Wilmar Q1 Results: Net loss at 79 crore, EBITDA down 71%; food, FMCG segment revenue up 28% YoY
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Adani Wilmar Q1 Results: Net loss at ₹79 crore, EBITDA down 71%; food, FMCG segment revenue up 28% YoY

Adani Wilmar Q1 Results: India's largest packaged oil maker's revenue from operations during the first quarter of current fiscal stood at ₹12,928 crore, registering a decline of 12 per cent, compared to ₹14,724 crore in the year-ago period.

Adani Wilmar reported a net loss of ₹79 crore in June quarter. Photo: Adani Wilmar websitePremium
Adani Wilmar reported a net loss of 79 crore in June quarter. Photo: Adani Wilmar website

Adani Wilmar Q1 Results: Adani Wilmar announced its April-June quarter results for fiscal 2023-24 (Q1FY24) on August 2, reporting a net loss of 79 crore, compared to a net profit of 194 crore in the corresponding period last year. India's largest packaged oil maker's revenue from operations during the first quarter of current fiscal stood at 12,928 crore, registering a decline of 12 per cent, compared to 14,724 crore in the year-ago period.

On the operating front, the edible oil major's earnings before interest, taxes, depreciation, and amortization (EBITDA) during the June quarter came in at 130 crore, reporting a sharp decline of 71 per cent, compared to 443 crore in the year-ago period. The EBITDA margin stood at 1 per cent, compared to 3 per cent in the same quarter last year.

Adani Wilmar Q1 Results: Segment highlights

Overall volumes of the fast-moving consumer goods (FMCG) company in the June quarter rose 25 per cent year-on-year (YoY) on broad-based growth across all segments, while the sales value declined by 12 per cent YoY, due to the steep decline in edible oil prices. 

The oil and foods segment continued to grow at a rapid pace in the alternate channels (E-com, MT, eB2B etc.) and recorded around 50 per cent YoY volume growth for the quarter. The company kept its focus on expanding the distribution of both oil and food products in the general trade channel,'' said Adani Wilmar in a regulatory filing to the stock exchanges.

The food and FMCG business segment recorded a revenue growth of 28 per cent to 1,097 crore. The segment's volume rose 21 per cent to 0.23 million metric tonne. The volume in its mainstay edible oil business rose 27 per cent to 0.89 million metric tonne, while revenue slipped 14  per cent to 9,845 crore.

‘’In food & FMCG segment, this was the eighth consecutive quarter with 20%+ volume growth and 30%+ revenue growth, on YoY basis for the standalone company,'' said Angshu Mallick, MD & CEO, Adani Wilmar.

The revenue of the company's edible oil segment during the June quarter stood at 9,845 crore, registering a decline of 14 per cent, compared to 11,511 crore in the year-ago period.

‘’Since Q1 of the last fiscal year, the price of edible oils has been declining. This trend continued during Q1’24 with the price of edible oils experiencing further decline, in the range of 5 per cent - 20 per cent (Q1’24 vs Q4’23), before recovering as the quarter came to a close,'' said the FMCG major in its exchange filing.

‘’This reduction has been attributed to a combination of factors, including the decline in consumer demand in developed economies, easing of supply at the Black Sea region and robust production of oilseeds globally,'' added Adani Wilmar.

The company is strengthening 'King's' — the third-best selling brand of soyabean oil in India—and positioning it across its entire range of packaged oils and foods to gain market share from regional brands, according to the earnings' statement. Adani Wilmar currently holds a 19.5 per cent market share in the edible oil segment.

 

Why did Adani Wilmar's profitability suffer during Q1FY24?

The decline in edible oil prices continued during the June quarter, leading to high-cost inventory. This impacted the company's overall profit. Apart from this, hedges dis-alignment was another factor for its lower income.

‘’The prices on commodity exchanges, which are used by Company to hedge price risk didn’t move in tandem with physical prices. As a result, hedges were in loss without corresponding gain in physical trade,'' said Adani Wilmar in its exchange filing.

The interest expenses went up on YoY basis, with the increase in the benchmark rates on the back of hike in the US Federal Reserve rates. Additionally, the company's wholly owned subsidiary in Bangladesh made losses of ~ 21 crore in the June quarter, due to price caps by the government on edible oils, local currency-related issues, and unavailability of counter party for forex hedging, which resulted in lower consolidated net profit.

The disproportionate allocation of tariff rate quota has also resulted in higher material cost for Adani Wilmar as compared with other players in April 2023 impacting the overall profitability.

Outlook

‘’The distribution expansion, gaining share in under-indexed markets and margin improvement will be the key priorities going forward in the consumer pack segment in both edible oil and food segments'', said Adani Wilmar in its statement. 

“We have regained the momentum in our edible oil business with the decline in the edible oil prices. The soft prices of edible oil are expected to augur well for the industry. The company is gaining good share from regional brands in the under-indexed customer segments with marketing and sales focus on specific geographies and oil categories. To capture the opportunity in the value-added blended oils, Company is investing in this segment, under Xpert brand,'' added the company's MD & CEO.

On August 2, shares of Adani Wilmar settled 3.10 per cent lower at 400.40 apiece on the BSE.

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 02 Aug 2023, 03:09 PM IST
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