Profit companies

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

Britannia Industries saw its net profit rise 4.3% year-on-year (YoY) to Rs 379.9 crore in the March quarter of FY2021-22 (Q4FY22) as margins came under pressure in due to rising raw material costs.

The cost of raw materials consumed in the quarter rose 21.3% to Rs 1,858.7 crore, while its margins stood at 17% from 18.2% a year ago. The biscuit major’s operating revenue rose 13.4% year-on-year in the fourth quarter to Rs 3,550.5 crore.

“During this quarter, we delivered solid revenue growth of 15% and mid-single-digit volume growth, demonstrating the resilience of our brands and reflecting our execution strengths across all divisions and all channels,” Varun Berry, MD of Britannia Industries, was quoted in a press release.

He also said the company continues to accelerate its rural journey with a focus on improving reach and maintaining its diligent market practices.

“Our growth in organized commerce channels remained robust, with e-commerce revenue doubling from a year ago,” Berry said. He also said the economy was affected by global geopolitical factors that caused inflation to spike again in the fourth quarter.

“We continued to take price increases wisely and remained aggressive on the cost front. Under these difficult circumstances, our operating profit for the quarter increased by 10% and over a 24-month period, by 23%,” added Berry.

Britannia will take further calibrated price increases and direct costs to manage profitability, Berry said.

Phillip Capital said in a report that he believed management’s game plan of increasing double-digit pricing globally, forwards and buying efficiency helped it mitigate the impact high raw material costs.

The company’s greenfield dairy plant is on track for commercialization in the coming months and it is in the process of setting up three greenfield units – one each in Uttar Pradesh, Tamil Nadu and Bihar.

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