PAT declines by 6% due to an exceptional cost of INR 9.8 crore
The Board of Directors of Emami Limited met on Thursday, 31st January 2019to consider theunaudited financial results of the company for the quarter and nine monthsended 31stDecember 2018.
The company closed the quarter with a Net sales of INR 800cr with a growth of 8%. Despite adelayed winter in some parts of the country resulting in a subdued performance by the winter brands, non-winter brands grew by 10% during the quarter in the domestic business.Market share gains continued for key brands.
The relaunch of Kesh King in its new contemporary packaging with comb applicator was received well by the market, as did the marketing campaign of ZanduPancharishta with its new celeb-endorser, Amitabh Bachchan. During the quarter, the company also launched an“Anti-Pimple” variant under the Fair and Handsome face wash range to tap into the opportunity of pimple clearing segment.
International Business grew by 18% during the quarter led by a strong performance in SAARC and MENAP regions. Market Shares of major brands also gained in key geographies.
During the quarter, Gross margins at 67.0% declined by 380 bps and EBIDTA margins at 32.9% declined by 210 bps due to a sharp increase in raw material costs. Despite this, EBIDTA grew by 1% and PBT before exceptional items grew by 3%. However, PAT declined by 6% due to an exceptional cost of Rs. 9.8 cr pertaining to VRS paid at one of our units.
In 9MFY19, Gross margins at 67.3% declined by 120 bps and EBIDTA margins at 28.2% declined by 20 bps due to increase in raw material costs. Despite this, EBIDTA grew by 6% and PBT before exceptional items grew by 8%.
Mohan Goenka, Director, Emami Limited said, “The onset of winter this quarter has been overall weak with its delayed arrival in some parts of the country. Due to this, the performance of the winter brand portfolio has been moderate. Additionally, there has been a challenge of sharp increase in raw material prices. However, targeted correctional steps for some leading brands in the domestic market and strategic initiatives in the international business, as adopted during the last quarter, have resulted in an encouraging growth in the respective sectors. Trade channels, especially modern trade has contributed significantly to the revenues.”
Harsha V Agarwal, Director, Emami Limited said, “The third quarter performance of the Company has been a mixed bag. While winter portfolio has been subdued, we are happy with the performance of our other major non-winter brands like Navratna, Emami 7 Oils in One and the Pain Management portfolio. Post its rejuvenation initiative, Kesh King has registered an encouraging performance this quarter.ZanduPancharishthawhich roped in Amitabh Bachchan as its new endorser, performed well to lead the Healthcare range on a satisfactory growth path. We are optimistic to close the year on a positive outlook.”
The company acquired Creme 21, a German brand with strong roots & brand recall on 25th January 2019. The brand has a strong presence in Middle East and other focus markets offering skin care and body care products such as creams and lotions, shower gels, sun care range, men’s range, etc. The brand was acquired at < 1.5x of sales and funded from internal accruals. With current sale at over €8 mn and gross margins of over 50%, the acquisition is expected to boost and complement Emami’s international business & portfolio particularly in MENA, SAARC and Russian markets
About Emami Ltd
Emami: (NSE: EMAMILTD, BSE: 531162) Emami Ltd, founded in 1974, is one of India’s leading FMCG Companies engaged in manufacturing & marketing of personal care & healthcare products. It is the flagship company of the diversified Emami Group.