Adani Wilmar Limited, the FMCG giant, recorded a 25 per cent volume growth in the first quarter of the financial year 2023-2024. The company’s sales of products in both edible oils and foods have been stronger compared to overall sales in respective segments.
The company’s volume growth on a year-on-year (YoY) basis was recorded at 25 per cent, while the sales value declined by 12 per cent which the firm said is reflective of the steep decline in edible oil prices.
The edible oils segment recorded a revenue of Rs 9,845 crore in Q1 of financial year 24, the food and FMCG segment recorded a 28 per cent YoY revenue growth of close to Rs 1,100 crore, while the industry essential segment recorded a revenue of Rs 1,986 crore, a 16 per cent decline on YoY basis.
Adani Wilmar Limited recorded a decline of Rs 79 crore decline in Profit after Tax (PAT) in the first quarter.
The firm cited several reasons that impacted the Quarter 1 profitability; The decline in edible oil prices continued in Q1, leading to a high-cost inventory.
The price of edible oils has been declining, and the trend continued in Q1 as well, the company said in a statement. The price further declined in the range of 5 to 20 per cent (Q1’24 vs Q4’23) before recovering. The decline in consumer demand in developed economies, easing of supply in the Black Sea Region and production of oilseeds globally was a combination of factors affecting the reduction, the firm said.
Prices on commodity exchanges, which are used by Company to hedge price risk didn’t move in tandem with physical prices. As a result, hedges were in loss without a corresponding gain in physical trade. Interest expenses went up on a YoY basis, with the increase in the benchmark rates on the back of a hike in the Fed rates.
The wholly-owned subsidiary in Bangladesh made losses of Rs 21 crore in Q1, due to price caps by the Government on edible oils, local currency-related issues, and unavailability of counterparty for forex hedging. This has resulted in lower consolidated PAT, compared to the standalone PAT.
“We have regained the momentum in our edible oil business with the decline in the edible oil prices. The soft prices of edible oil are expected to augur well for the industry,” Adani Wilmar Limited CEO, Angshu Mallick, said.
“Our margins during the quarter got impacted by high-cost inventory in a falling edible oil price environment and dis-aligned hedges compared to spot prices of a physical commodity,” he added.
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