Adani Wilmar Q2FY23 PAT dips 73% to Rs 49 cr

H1FY23 PAT was also down by 32 percent at Rs 242 crore against Rs 358 crore in the year-ago period.

Q2FY23 Profit Before Tax (PBT) stood at Rs 60 crore, down 74 percent compared to Rs 229 crore in the same period last financial year.

During the period under review, EBIDTA  stood at Rs 313 crore, down 31 percent in comparison to Rs 455 crore.

Its H1FY23 revenue grew by 16% at Rs 28,986 crore while it was Rs 24,949 crore during the same period last fiscal.

Adani Wilmar said it registered 9% volume growth, and 5% revenue growth, primarily led by robust growth in Food & FMCG in Q2FY23, according to a company release.

In H1FY23, the company registered 12% volume growth, 17% revenue growth led by Food & FMCG

Its revenue during the period stood at Rs 14,209 crore against Rs 13,584 in Q2F22.

Despite the challenging external environment, Adani Wilmar said it has registered strong volume growth in the high single digit in Q2FY23 riding on the growth in the Food & FMCG segment and Industry Essentials.

In the edible oils segment, the quarter that went by saw multiple challenges in consumer demand with several macro headwinds in the form of high inflation, rising interest rates, delayed monsoon, and tepid rural demand, it said.

Edible oil volumes remained flat due to sluggish demand in the semi-urban and rural markets. However, sequentially quarter-over-quarter, edible oil grew by 17% in volumes, suggesting an uptick in demand in Q2FY23.

The Company witnessed multiple headwinds on the margin front, with the high volatility in edible oil prices, allotment of lower TRQ (Tariff Rate Quota) and inflation impact on our operating expenses.

The Company grew YoY by 9% in volumes and 4% in revenue in Q2FY23.

A significant contribution came from Food & FMCG as well as Industry Essentials, which grew robustly at 41% and 22% y-o-y, respectively – thereby driving larger diversification in the revenue base and strengthening the platform for multiple business growth drivers for the future.

Key Highlights:

Relaunch of Kohinoor and other brands in the Rice segment:

Post the acquisition of Kohinoor brand in May 2022, the company relaunched the entire product range to the markets in August 2022.

The company is optimistic on the prospects of market share gains in the rice business with the strategy of addressing the premium consumer segment through Kohinoor brand and mass segment through brand Charminar, and penetrating the HoReCa segment through the Trophy brand.

Market Share: (Nielsen MAT September 2022)

Market share in Edible Oil grew by 30 basis points to 18.5% on a standalone basis and 19.5% on a consolidated basis.

Fortune Atta continued to gain market share reaching 4.9% share as against 3.9% in the same quarter last year;

Fortune Basmati and Kohinoor now has a combined market share of 10%, with Fortune share growing from 5.1% to 8.5%.

With the recent relaunch of Kohinoor brand in the market, company expects further gains in market share.

Profitability:

The quarter witnessed multiple headwinds in the edible oil segment.

Due to macro factors affecting the demand-supply situation in edible oils, there was a steep decline in prices of palm oil, soyabean oil and sunflower during the quarter.
Sharp fall in prices left most of the players with high price inventory in hand.
The company also passed on the benefit of lower prices to the consumers.
This coupled with currency depreciation impacted margins during the quarter.
However, this is purely cyclical in nature and on account of events that the industry witnessed in the quarter.

The tariff rate quota (TRQ) announced by the government in July 2022 was a step towards controlling inflation.
While this was a welcome move for the industry and consumers, it put the company into a disadvantageous position, given that the quota share allocated to us was lower than both our market share and manufacturing capacity.
As a result, cost of sourcing of soyabean oil for us was higher than the competition leading to a disparity in the business.

The inflation impact on operating cost added further pressure on margins in Q2FY23.

Near-term Outlook:

September 2022 witnessed higher edible oil imports of 1.59 MMT against 1.37 MMT in August 2022, the company said.

"We see positive signs of recovery going forward in edible oils business for H2FY23, with softening of commodity prices and the recent uptick in demand on the back of festivities and weddings, it added.