Informist, Tuesday, Apr 23, 2024

--Tata Consumer Jan-Mar consol net profit 2.17 bln rupees
--Analysts saw Tata Consumer Jan-Mar consol net profit 3.75 bln rupees
--Tata Consumer Jan-Mar consol revenue 39.27 bln rupees
--Tata Consumer Jan-Mar consol PAT 2.17 bln rupees vs 2.69 bln
--Tata Consumer Jan-Mar consol revenue 39.27 bln rupees vs 36.19 bln
--Tata Consumer: One-time cost of 2.16 bln rupees in Jan-Mar
--Tata Consumer FY24 consol net profit 11.50 bln rupees vs 12.04 bln
--Tata Consumer FY24 consol revenue 152.06 bln rupees vs 137.83 bln
--Tata Consumer to pay 7.75 rupees/share dividend
--Tata Consumer: Jan-Mar consol EBITDA margin 16.1%, up 180 bps YoY
--Tata Consumer: Jan-Mar India beverage volume flat YoY
--Tata Consumer:India Jan-Mar tea mkt share dn 30 bps in volume terms
--Tata Consumer:India Jan-Mar tea mkt share dn 50 bps in value terms
--Tata Consumer:India Jan-Mar salt mkt share up 50 bps in value terms
--Tata Consumer: Salt touched highest-ever mkt share of 39.9% Jan-Mar
--Tata Consumer: FY24 India salt volumes up 4%
--Tata Consumer: FY24 India salt revenue up 9%
--Tata Consumer: Tata Starbucks Jan-Mar revenue up 7% YoY
--Tata Consumer:Tata Starbucks FY24 revenue 12.18 bln rupees, up 12%

By Avishek Rakshit

KOLKATA – Continued losses by associate companies in the plantations business and one-time losses arising from business amalgamations led Tata Consumer Products Ltd to miss the Street’s projections on its consolidated net profit for Jan-Mar by a wide margin.

The country’s second-largest tea retailing company posted a consolidated net profit of 2.2 bln rupees for the quarter, down 19.4% year-on-year.

Volume growth, especially in the foods categories, which accounted for 29.4% of the company's consolidated revenues for Jan-Mar, and value growth in the beverages segment, which accounted for 33.7% of its revenues for the quarter, led the company to register consolidated net sales of 39.3 bln rupees, up 8.5% on year.

Sector analysts had estimated that Tata Consumer Products would post a net profit of 3.7 bln rupees on revenues of 39.6 bln rupees. It is not known if the analysts had taken into account the losses arising from the plantations business and the write-offs leading to losses during the business amalgamation process as they did not mention any of these in their notes while making their projections.

The consolidated earnings before interest, tax, depreciation, and amortisation for the quarter was at 6.3 bln rupees, up 22%. Analysts had projected an EBITDA of 5.9 bln rupees for Jan-Mar. At 16.1%, the EBITDA margin for Jan-Mar also beat the Street’s projection of 15.4%. The EBITDA margin rose by 180 basis points on year. For the year ended Mar 31, EBITDA was at 23.2 bln rupees, up 24%.

During Jan-Mar, the company took a hit of 2.2 bln rupees which is counted as a one-time loss arising out of the amalgamation of Tata Coffee into Tata Consumer Products. The coffee company merged with the fast-moving consumer goods company effective Jan 1. However, the plantation business of Tata Coffee was hived off into TCPL Beverages and Foods, a wholly owned subsidiary of Tata Consumer Products. Later, as part of the arrangement, TCPL Beverages and Foods was renamed Tata Coffee Ltd.

Costs relating to the scheme of arrangement came in at 910 mln rupees, costs related to acquisitions came in at 100 mln rupees, and assets worth 620 mln rupees had to be written down. The company also had to absorb a fair value loss on financial instruments worth 530 mln rupees.

Losses from associate companies in the plantations vertical-–Amalgamated Plantations Pvt Ltd and Kanan Devan Hills Plantations Co Pvt Ltd-–stood at 554.5 mln rupees, decreasing by just 1% on year. The plantations vertical, which is in the business of growing and selling bulk tea, recorded a revenue decline of 30% owing to muted volumes and lower tea prices.

However, lower tea prices also benefited Tata Consumer Products, as procurement costs fell year-on-year, leading the company to buy more tea from auctions. On Thursday, citing tea brokers, Informist reported exclusively that Tata Consumer Products bought 20.7 mln kg of tea from auction centres in Kolkata, Guwahati, and Siliguri during 2023-24 (Apr-Mar), a 14% year-on-year increase. The company's potential savings, calculated assuming it bought the same quantity in 2022-23 auctions, worked out to 540 mln rupees.

Nevertheless, the business amalgamation costs affected the company’s pre-tax profits negatively even before the losses from the plantations business were factored in.

During Jan-Mar, although revenues from the beverages business in India, comprising tea, coffee, and water, rose 3% year-on-year to 13.2 bln rupees, sales volumes were flat, against the expectations of growth by sector analysts. In fact, the tea business of Tata Consumer Products in India lost market share in value terms by 50 basis points and in volume terms by 30 basis points during Jan-Mar. However, the company said that for the year ended Mar 31, premium and sub-premium segments outperformed the overall business and accounted for over two-thirds of the tea business in India.

“Our premiumisation agenda continues to progress well with the premium portfolio in both tea and salt showing good growth and contributing to an increasing share of the overall portfolio,” Sunil D’Souza, managing director and chief executive officer at Tata Consumer Products, said in a statement issued by the company.

The new NourishCo brand of beverages, which sector analysts are bullish on because of its low base and expected high consumer demand, recorded revenue growth of 13% during the quarter. The growth was reined in only by the delayed onset of summer, the company said.

In the foods business, however, the company registered 4% volume growth and 20% revenue growth, including the revenue from Capital Foods, which was acquired in January and integrated recently. Excluding the positive impact on its revenues from Capital Foods, which gives a like-for-like comparison, the revenue growth is 11% year-on-year.

The salt business, where the company is the market leader, saw Tata Consumer Products touch its highest-share of 39.9% in Jan-Mar. Revenues from the salt business grew 5% during the quarter, driven by volume growth of 3% and a favourable sales mix, the company said. For 2023-24, revenues from the salt business grew 9% with a volume growth of 4%.

At the same time, revenues from the Tata Sampann brand of food products grew 42% during Jan-Mar and by 45% in Apr-Mar, the company said. “Our growth businesses (Tata Sampann, ready to drink, Tata Soulfull, Tata SmartFoodz) continued their strong growth trajectory with a revenue growth of 40% in FY24 (2023-24),” D’Souza said.

The Tata Starbucks cafe chain, where the company has a 50% stake, registered 7% revenue growth in Jan-Mar, which brought its average growth for 2023-24 to 12%. Tata Starbucks ended the financial year with a revenue of 12.2 bln rupees.

The international business, which accounted for 26.8% of the company’s consolidated sales in Jan-Mar, registered a revenue growth of nearly 7% at 10.5 bln rupees.

For the year ended March, Tata Consumer Products made a net profit of 11.5 bln rupees, down 4.4%, on a revenue of 152.1 bln rupees, up 10.3%. On the National Stock Exchange, shares of Tata Consumer Products recovered from the intraday low of 1,152 rupees they touched ahead of the release of the results, and closed at 1,173.4 rupees, up marginally from Monday's close. End

Edited by Rajeev Pai

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