United Spirits Limited, the largest spirits company in India and a part of Diageo Plc, has reported a decline in its consolidated net profit for the December 2022 quarter. The company’s net profit fell 4.29% year-on-year to ₹1,246.5 crore, as compared to ₹1,305.9 crore in the same period a year ago.
The decline in net profit is attributed to a 4.6% decrease in consolidated revenue from operations to ₹7,144.3 crore, compared to ₹7,499.4 crore in the corresponding quarter a year ago. This decline in revenue is due to a 3.5% decrease in domestic sales and a 6.2% decline in exports.
Despite the decline in revenue, the company’s operating profit remained stable, increasing 1.2% to ₹2,467.6 crore, driven by a 12.9% increase in operating expenses. The company’s gross margin improved 130 basis points to 34.6%, while its operating margin remained stable at 34.5%.
The company pointed out that the quarter was impacted by a 5.5% decrease in sales volumes due to the ongoing Omicron wave and increased competition in the market. However, the company believes that its portfolio of brands, which includes Johnnie Walker, McDowell, and Antiquated, will help it to recover from the current challenges.
The company also reported a significant improvement in its working capital cycle, which has led to an 18.2% decrease in inventory days and a 12.4% decrease in debtor days, contributing to an 11.3% decrease in working capital days.
In terms of the outlook, the company expects the spirits market to recover gradually as the COVID-19 situation improves and consumer spending increases. The company believes that its strong brand portfolio, effective cost management, and expected increase in sales volumes will help it to recover and grow in the future.
Overall, the decline in United Spirits’ profits is a temporary setback for the company, which is expected to recover as the spirits market improves and consumer spending increases. The company’s strong brand portfolio and cost management strategies position it well to navigate the current challenges and achieve future growth.