Varun Beverages Limited (BSE: 540180, NSE: VBL), a key player in the beverage industry, announced its financial results for the second quarter and half year ended June 30, 2018.
Financial Performance Highlights*
Performance Review for Q2 2018 vs. Q2 2017
- Revenue from operations (net of excise / GST) grew 26.1% YoY to Rs. 20,591 million as compared to Rs. 16,334 million
- Total sales volumes were up 21.3% YoY at 136.4 million cases in Q2 2018 as compared to 112.5 million unit cases in Q2 2017
- Strong organic volume growth trend continued in India at 12.6% in Q2 2018 while organic volume growth on a consolidated basis stood at 9.8%
- EBITDA increased by 19.6% to Rs. 5,749 million from Rs. 4,805 million
- Underlying margins have improved in existing as well as recently acquired territories
- Blended EBITDA margins declined 150 bps YoY to 27.9% due to sub-optimal volumes/margins in acquired sub-territories and contribution from the Tropicana juice portfolio, where at present VBL has only a supply and distribution arrangement, and not manufacturing the product
- PAT increased by 24.9% to Rs. 3,068 million from Rs. 2,456 million
- In line with the guidelines of dividend policy, the Board of Director's have recommended an interim dividend of Rs. 2.5 per share. Total cash outflow would be ~ Rs. 550.5 mn (inclusive of statutory taxes payable).
Performance Review for H1 2018 vs. H1 2017
- Revenue from operations (net of excise / GST) grew 25.5% YoY to Rs. 31,539 million as compared to Rs. 25,126 million
- EBITDA increased by 21.0% to Rs. 7,476 million from Rs. 6,177 million
- PAT increased by 29.3% to Rs. 3,265 million from Rs. 2,525 million
Commenting on the performance for Q2 & HI 2018 Mr. Ravi Jaipuria, Chairman, Varun Beverages Limited said, "We are pleased to announce that we have delivered a strong performance in the second quarter, the peak season for our products, delivering a robust topline growth of 26.1% and net profit growth of 24.9%. What is encouraging is that volume growth has reverted to double digits in line with historical trends of the last 25 years. Organic volume growth in India was robust at 12.6% in Q2 2018. The introduction of new product categories, like Tropicana and Sting, has resulted in better portfolio mix and improved our realizations during the quarter.
Over the last 12 months we have undertaken several business strengthening initiatives including the acquisition of 5 new sub-territories in India, setup a greenfield plant in Nepal as well as made a very successful foray info fhe Zimbabwean market, recording strong volumes. Even after these investments, we have been able to drive a reduction in our overall debt levels on the back of healthy cash flows.
Despite the robust volume growth, our capacity utilization during fhe peak month has remained under 70%, providing significant scope for growth on existing investments. Further, the territories acquired are highly under-penetrated and provide huge opportunity for increasing volumes and gaining markef share.
We have enhanced our portfolio mix over fhe last few months with new product additions with ethnic flavours in fhe fasf growing juice segment. We will leverage our existing distribution network and chilling infrastructure to help expand volumes in the Tropicana juice business in the North and East regions by growing its availability in these regions. These initiatives augur well for our long term growth prospects and also will reduce seasonality, enhance profitability and augment return ratios.
We are focused on strengthening our reach and increasing availability in line with customer preferences and are confident that the efficient execution of our strategy will translate into profitable, sustainable and responsible growth."
*Note 1: VBL follows a calendar year of reporting (Jan to Dec]; Note 2: Given the seasonality in the business, it is best to monitor the business on an annual basis as a significant portion of the revenues and entire profits are realized in the Apr-June quarter
Shares of Varun Beverages Ltd was last trading in BSE at Rs.762.25 as compared to the previous close of Rs. 738.05. The total number of shares traded during the day was 5111 in over 269 trades.
The stock hit an intraday high of Rs. 774.5 and intraday low of 738. The net turnover during the day was Rs. 3885871.