United Spirits Q3 profit up 43% on demand for premium brand

India’s largest liquor company United Spirits Ltd (USL) reported a 42.83% jump in total profit and a 9.27% increase in revenue during the third quarter of 2018-19, as double-digit growth rates in its premium brands continued. But the Diageo Plc-owned company warned that the general election would impact sales during the next quarter.

USL’s total profit grew to ₹19.24 crore from ₹13.47 crore year-over-year during the October-December quarter. Revenue increased to ₹782.5 crore from ₹716.09 crore on a year-ago basis, the company reported in a filing with the BSE on Wednesday night.

“While we have been in a relatively stable operating environment this year, looking ahead, we do expect the general elections to have an impact on our sales during the next quarter. We will, however, continue to make progress towards our strategic priorities in order to capture the long-term opportunity in the spirits market in India. We also reiterate our medium-term ambition to grow our top line by double digits consistently and to improve EBITDA margin to the mid-high teens,” USL's chief executive officer Anand Kripalu said in a statement.

Net sales in USL’s prestige and above segment, or premium brands, grew 16% during the quarter and 18% during the first nine months of 2018-19. USL’s premium brands, which include those like Royal Challenge and Signature whiskies, have been the primary focus area for growth ever since Diageo took over. Within this segment, luxury brands grew faster than premium brands during the first nine months of the financial year, the company said.

But sales of the company’s popular or economy brands continued to decline. The popular segment, which consists of brands like Bagpiper and Director’s Special, declined 3% in the third quarter.

“We made further progress in monetizing some of our non-core assets; and that, together with an improved operating performance, has helped us deliver an overall PAT (profit after tax) increase of 43% during the quarter,” Kripalu added in the statement.