United Breweries Limited Q2 Results FY24

Key Highlights 

• Net profit declined by about 20% to ₹107.6 crore, compared to ₹134 crore in the same period last year.
• Net revenue from operations in the current fiscal’s Q2 was ₹1,888 crore, a 14.2% increase from the previous year.
• EBITDA for the September quarter was ₹184.5 crore, down 15.8% from the previous year, with a margin of 9.8% compared to 13%.
• The company’s quarterly volume grew by 7%, driven by Telangana, Orissa, and Rajasthan, but declined in Delhi.
• The premium segment saw a 10% growth in Q2, with notable contributions from the Kingfisher Ultra family and Heineken Silver.

Additional Read: Q2 Results Dashboard

Performance Highlights of

• Strong volume recovery in Q2 with a 7% increase, and the premium segment outpacing the total portfolio.
• Net sales in Q2 rose by 12% compared to the previous year, driven by volume and revenue management efforts.
• Gross profit margin in Q2 reached 44.5%, showing a further improvement from Q1 (+396 BPS).
• Year-to-date EBITDA stands at Rs. 430 crore.
• Q2 volume increased by 7% (+9% excl RTM changes), primarily driven by Telangana, Orissa, and Rajasthan, partially offset by a decline in Delhi.
• The premium segment grew by 10% in the quarter, with double-digit growth for the Kingfisher Ultra family and over 20% contribution from Heineken® Silver to the Heineken® franchise.
• Year-to-year gross profit margin was lower compared to the previous year (-287 BPS) but improved from the previous quarter (+396 BPS), thanks to continued revenue management and cost initiatives.
• Capex investments in the first half of the year amounted to Rs. 91 crore, primarily directed towards supply chain initiatives for future growth.
• Despite some inflationary softening in Q2, volatility remains a factor. UBL remains optimistic about the industry’s long-term growth potential driven by increasing disposable income, favourable demographics, and premiumization.

Additional Read: United Breweries Ltd Share Price

Q2 Volume Rises 7% on Strong Demand

Volume Growth in Q2: 

• Overall: +7%
• Excluding Returnable Transport Packaging (RTM): +9%

Half-Year (HY) volume growth:

• Overall: -4%
• Excluding RTM: +1%

Regional Breakdown:

North: 

• Volume increased by 1%.
• Volume decline in Delhi and Haryana was offset by growth in Rajasthan and Uttar Pradesh.

West: 

• Volume increased by 2%.
• Growth was driven by Goa, Maharashtra, and Madhya Pradesh.

South: 

• Volume increased by 11%.
• Notable growth in Telangana and Andhra Pradesh.

East: 

• Volume increased by 11%.
• Predominantly driven by growth in Orissa and Jharkhand.

Net Sales Increase Fueled By Volume Growth And Strong Pricing

• In the second quarter, there was a notable volume growth of 7%. This growth was primarily driven by strong performance in regions like Telangana, Orissa, and Rajasthan. However, this positive trend was partially offset by a decline in the Delhi region.
• Price increases were observed in key markets, which included regions such as Rajasthan, Uttar Pradesh, and Karnataka.
• Despite these changes, there was a stable mix in the overall performance. A positive brand-mix was achieved, although this achievement was nearly fully offset by the state-mix changes originating from Karnataka and Telangana.

Volume Decline In The First 6 Months More Than Off-set By Pricing

• A 4% decline in volumes was primarily influenced by regions including Delhi, Haryana, Andhra Pradesh, Tamil Nadu, and Karnataka, although this was partially balanced by the growth in Telangana, Rajasthan, Uttar Pradesh, and Orissa.
• Key markets experienced price increases, notably in regions such as Rajasthan, Uttar Pradesh, and Karnataka.
• A positive mix was achieved, driven by lower inter-state sales, particularly in the first quarter, and adjustments in state mix-mix.

8% EBIT Margin Despite Inflationary Pressure On Cost Base

• Gross Profit was primarily influenced by a decline in volume and rising Costs of Goods Sold (COGS), resulting in a Gross Profit margin that decreased by 287 basis points compared to the previous year. However, there was an improvement in Q2 of FY24 compared to Q1 of FY24, with an increase of 396 basis points, driven by revenue management initiatives.
• Despite the negative impact on Gross Profit, the development of fixed costs partially offset this effect, especially due to reduced sales and distribution expenses.

Q2 (Jul’23-Sep’23) Results

Q2 Results (standalone)
Data in Rs. Cr.	Sep-23	Sep-22	Change %
Net Sales	1,888	1,680	12%
COGS	(1,047)	(896)	17%
Gross Profit	841	784	7%
Employee Expenses	(164)	(139)	18%
Other expenses	(492)	(426)	15%
Other income	12	14	-15%
EBITDA	197	233	-16%
Depreciation	(51)	(52)	-2%
EBIT	146	181	-20%
Finance Costs	(1)	(1)	44%
Profit before tax	145	180	-20%
Tax	(37)	(46)	-20%
Profit after tax	108	134	-20%
As % of Net Sales	Sep-23	Sep-22	Change (bps)
Gross Profit	44.5%	46.7%	(213)
EBITDA	10.4%	13.9%	(347)
EBIT	7.7%	10.8%	(307)
Profit before tax	7.7%	10.7%	(309)
Profit after tax	5.7%	8.0%	(229)

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Source : 

https://www.bseindia.com/xml-data/corpfiling/AttachLive/7c847d87-c651-4655-9a71-d27ccf315f17.pdf

https://www.bseindia.com/xml-data/corpfiling/AttachLive/da9f5d08-03cf-4b70-b523-db30210302a6.pdf