United Spirits Q2 Results FY2023, PAT at Rs. 563 crores

On 21st October 2022, United Spirits announced its second quarter results for the period ending 30th September 2022. 

Q2FY23 Performance updates:

-  Net sales increased 17.7%, reflecting a strong quarter. The growth reflects resilient consumer demand in off-trade, rebounding in on-trade, and continued mix improvement.
- The gross margin was 39.5%, primarily reflecting the adverse impact of double-digit inflation in COGS.
- Reported EBITDA was Rs. 446 crores, up 4.8% and EBITDA margin was 15.5%. 
- Exceptional items primarily comprise a one-time profit of Rs. 381 crores arising from the slump sale of the business undertaking associated with 32 brands in the ‘Popular’ segment. 
- Reported PAT, after incorporating the exceptional gain accruing from the slump sale transaction was Rs. 563 crores, up 105.9%.

Business Highlights:

- The Prestige & Above segment accounted for 75% of net sales during the first half of the year, up 372ppts compared to the same period last year. Prestige & Above segment net sales increased 18.2% by volume during the first half of the year due to weak prior period comparators. 
- The Popular segment accounted for 24% of net sales during the first half of the year, down 386ppt compared to the same period last year. Net sales of the Popular segment in Priority states grew 6.9% during the first half of this year. The Popular segment net sales grew 5.8% by volume during the first half within which the sold and franchised portfolio grew 5.5%. 

Commenting on the results, Ms. Hina Nagarajan, CEO of United Spirits said: “We have delivered a quarter of strong top-line growth and resilient bottom-line performance. The performance is underpinned by continued growth momentum and strong mix improvement from recent innovation and brand renovations. We have successfully completed the sale of the business undertaking associated with 32 brands in the ‘Popular’ segment to Inbrew Beverages Pvt. Ltd. and have given effect to the franchise of 11 other brands for a period of five years. This is aligned to our mission and key to our “Portfolio Reshape Strategy”. The external environment remained challenging during the quarter with ongoing scotch pricing negotiations in select states, route to market change in Delhi and unprecedented levels of input cost inflation. We maintained cost discipline while investing in long-term priorities. Looking ahead, in the shorter term, we expect inflation challenges to continue. Scotch price discussions have successfully concluded in a few states. We are focused on maintaining the momentum while driving revenue growth management initiatives and ramping up productivity across the value chain. With the consumer at the heart of our business, the strength of our reshaped portfolio and the investment we are making to accelerate our strategic priorities, we are confident of growing the business in a consistent and sustainable way to create long-term value for all our stakeholders.”