close
Business

Adani Wilmar Sees Revenue Growth At Low Single Digits In Q2


Adani Wilmar Ltd., the consumer goods business of billionaire Gautam Adani, is set to register low single-digit revenue growth during the quarter ended September as multiple macro challenges continued to mar operations.

The second quarter essentially absorbed the market shocks of high inflation followed by a sharp decline in prices, Adani Wilmar said in its quarterly business update filed with the exchanges on Wednesday.

“We witnessed higher volume growth in the masstige category rather than premium category as a result of downtrading that continued during the quarter,” said the country’s largest edible oil maker, which sells under the brand name Fortune.

The food and fast-moving consumer goods basket continued its upward trajectory similar to previous quarters, registering growth of over 40% and leveraging the pan-India distribution of edible oil business, according to the company.

Industry essentials also grew close to 20% during the quarter, it said. “Overall, the business remained positive on growth trajectory riding particularly on the food and FMCG, and Oleo chemicals business.”

According to the company, the three months till September were impacted by the continued geo-political standoff, rising interest rates, slow uptick in rural demand and delayed withdrawal of monsoon in major parts of India.

Softening of commodity prices and higher food grain production estimates for FY22, announced as part of fourth advance estimates, however, were some of the positives, the company said in a statement.

The prices of edible oils—namely palm oil, soyabean oil and sunflower oil—sharply declined in the quarter and is now trending more or less at pre-Covid-19 levels.

“We saw the prices of palm oil and soyabean oil drop sharply from the highs of $1,750 and $1,850 in June to $850 and $1,100 a ton by the end of September 2022,” the company said.

The sharp fall in prices left most of the players with high price inventory in hand.

Adani Wilmar passed on the benefit of lower prices to customers in a bid to protect market share. But this, coupled with currency depreciation, impacted margins for this quarter. The margin hit is “purely cyclical” in nature on account of events that the industry witnessed in this quarter, it said.

For the first half of the ongoing fiscal, the company said that both revenue and volume growth are expected to be in “low double-digits”. However, it expects consumption to revive in the second half of FY23 on the back of festivities and softening of prices across food categories.

“We are hopeful of sequential improvement in demand trends with easing retail inflation and good monsoon,” the company said.

It also expects to invest in the large untapped food and fast-moving consumer goods business, as Asia’s richest person doubles down on the empire’s food operations. This comes weeks after Reliance Industries Ltd. announced plans to launch a consumer goods business.

Seeking to become India’s largest FMCG firm in the coming years, it is already scouting for brands in staple foods. It has earmarked Rs 500 crore from its initial public offering for the buyouts.

Adani Wilmar recently acquired several brands, including the Kohinoor cooking brand from McCormick Switzerland for an undisclosed amount.

The company has a diversified product portfolio offering, most of which include kitchen essentials such as edible oil, wheat flour, rice, pulses, besan and sugar.

Its flagship brand Fortune reaches over 113 million households, indicating that at least one out of three households consumes a Fortune product, according to the company.





Source link