Britannia Industries net profit up 4.3%, but margins under pressure

Britannia Industries saw its net profit increase 4.3 per cent year-on-year (YoY) to Rs 379.9 crore in the March quarter of financial year 2021-22 (Q4FY22) as margins were under pressure due to higher raw material costs.

The cost of raw material consumed in the quarter was up 21.3 per cent to Rs 1,858.7 crore, while its margins stood at 17 per cent, compared with 18.2 per cent in the year-ago period. The biscuit major’s revenue from operations rose 13.4 per cent YoY in Q4 to Rs 3,550.5 crore.

“In this quarter, we delivered a robust top-line growth of 15 per cent and a mid-single-digit volume growth which demonstrates the resilience of our brands and a reflection of our execution strengths across divisions & channels,” Varun Berry, MD of Britannia Industries, was quoted as saying in a press release.

He also said the company continued to accelerate its rural journey focusing on enhancing reach and sustaining its diligent market practices.

“Our growth in organised trade channels remained robust, wherein revenues from ecommerce doubled over last year,” Berry said. He also said the economy was impacted by global geopolitical factors which caused further surge in inflation in Q4.

“We continued to take price increases judiciously and remained aggressive on the cost front. In these challenging circumstances, our operating profits for the quarter grew by 10 per cent and over a 24-month period, by 23 per cent,” Berry added.

Britannia will take further calibrated price increases and drive cost leadership to manage profitability, Berry said.

Phillip Capital said in a report that it believes the management’s game plan of double-digit price hikes at the aggregate level, forward contracts and efficiencies in procurement have helped it mitigate the impact of high raw material costs.

The company’s dairy greenfield factory is on track for commercialisation in the next few months and it’s in the process of setting up three greenfield units — one each in Uttar Pradesh, Tamil Nadu, and Bihar.

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