Britannia said that an 82% increase in tax expenses impacted profitability.

Britannia biscuits on display at a store
Money FMCG Tuesday, October 20, 2020 - 12:53

Consumer goods major Britannia Industries reported a growth of 23.2% in its net profit to Rs 495.20 crore for the second quarter of the current fiscal. Britannia reported a consolidated profit of Rs 498.13 crore, and its consolidated revenue grew by 11%. 

Britannia said that an 82% increase in tax expenses impacted profitability. Its revenue from operations climbed 12.15% to Rs 3,419,11 crore as compared to Rs 3,048.44 crore at the same time last year. 

However, despite a health growth in net profit, Britannia’s stock fell by over 5% on Tuesday with analysts saying that the revenue growth was marginally below expectations. At the time of writing, its stock was down 5.19% down to Rs 3,578.05 on the Bombay Stock Exchange, and 5.15% down on the National Stock Exchange.

Commenting on the performance, Managing Director Varun Berry said they got their full range of products to the market during the quarter.  

“In this quarter, we got our full range of products to the market, focussed on efficiency in distribution, followed continuous replenishment system of distribution, improved the health of our distributors and inched closer to normalcy in advertisement and promotions,” he said.

He said that the company witnessed moderate inflation in the price of key raw materials, and that it is expected that the prices will be stable going forward because of the forecast of a good monsoon and a good harvest. 

“We sustained a large part of the efficiency gains that we witnessed in the previous quarter viz., supply chain efficiencies, reduction in wastages and fixed costs leverage. These measures helped us sequentially sustain the shape of our business and record a massive 390 bps increase in operating profit during the quarter vs. last year,” he said. 

In terms of strategy, Berry said that they are keeping “a close watch on macro-economic factors, changes in laws, evolving consumer behaviour and are framing our medium-term strategy laying out scenarios to deal with this dynamic environment.” 

He said that due to COVID-19, there have been tectonic shifts in economic growth and consumer behaviour across the world. 

“While the Government ended the lockdown, it appears that it will take a while for the situation to normalize. These times have re-enforced the importance of giving back to the society & community at large and we are making headways into creating a business which cojoins sustainability & profitability,” he said. 

“The nimble culture and the hard work put in by the team helped deliver a resilient performance in these challenging times. All the adjacent businesses too delivered a healthy profitable growth,” he added. 

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