Britannia Industries has booked higher first-half sales and earnings – but the India-based food group saw the rate of growth in its profitability slow in the second quarter.
The company posted net profit of INR4.53bn (US$68m) for the six months to the end of September, up 9.2% on the first half of its 2015/2016 financial year. Britannia’s operating profit stood at INR5.98bn, 7.2% higher on the corresponding period the previous year.
Britannia said its net profit was up 6% in the second quarter, with its operating profit 4% higher. The company enjoyed an 11% rise in second-quarter sales, underpinned by what MD Varun Berry called “double-digit volume growth in our base business”.
However, Berry indicated Britannia had faced pressure from raw-material costs. “On the commodity front, prices of key raw material have had a high, double-digit inflation, which is much beyond what we had originally estimated. While we have initiated price increases and accelerated our cost efficiency programme, our focus is on remaining competitive in the marketplace and gaining market share to build a sustainable business,” Berry said. “We are also hopeful that certain initiatives taken by the government in terms of reduction in import duties, imposition of stocking norms et cetera shall provide some respite from this steep inflation going forward.”
The 11% growth in second-quarter revenues led to Britannia’s top line reaching INR24.3bn for the three-month period. The result showed Britannia’s revenue growth accelerated when compared to the first quarter. The company saw its revenue increase 9.8% to INR4.59bn in the first six months of the year.
Looking outside India, Berry said: “The deteriorating geopolitical situation and currency fluctuations in certain geographies like the Middle East and Africa continue to impact our growths.”
However, Berry said innovation had helped its business in India and the company was continuing to work on new products. “Our strategy of plugging portfolio gaps through new product launches and refreshing our brands will strengthen our momentum as we move ahead,” Berry said. “We see many untapped opportunities in our biscuit business and are actively working on other adjacent macro snacking business opportunities to ensure we stay ahead of the market and achieve profitable growth to take our company to the next level.”