India: United Spirits report 35% increase in net profit for quarter ended December 2019

United Spirits Ltd (USL) on January 27 reported a 35% increase in net profit for quarter ended December, helped by premium portfolio, savings in operating costs and lower marketing reinvestment rate. The maker of McDowell whisky and Romanov vodka posted net profit of Rs 258.8 crore during the third quarter compared to Rs 192.4 crore a year ago.

Total income at the country’s largest liquor firm controlled by Diageo Plc was flat at Rs 7,824.8 crore, up 0.15%.

“We saw a sequential improvement in the current quarter with overall sales growing, led by our ‘prestige and above’ portfolio, even as the broader consumption slowdown continued to weigh on the overall business,” said Anand Kripalu, MD and CEO of Diageo India, in a stock exchange filing. “We continued to experience substantial inflation in our key raw material costs resulting in significant compression in gross margin.”

Gross margin was 44.4%, down 421 basis points compared to last year, primarily due to the adverse impact of input cost inflation. While prestige and above segment net sales grew 8%, popular segment sales declined 5%.

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