India: United Spirits sees Q3 net profit rise by 20.82%

Diageo-controlled liquor maker United Spirits Ltd (USL) on January 27 reported a 20.82% rise in consolidated net profit at ₹280.3 crore for the third quarter ended December 2020. The company's board, on the same day, also approved the succession plan to appoint Hina Nagarajan as the Chief Executive Officer - Designate of the company from April 1.

USL had posted a net profit of ₹232 crore in the 2019 December quarter.

The company's revenues from operations jumped 7.65% to ₹8,410.3 crore in the latest December quarter. In the year-ago period, the same stood at ₹7,812.3 crore, according to a regulatory filing.

However, total expenses climbed to ₹8,074.5 crore in the third quarter of the current fiscal as against ₹7,503.3 crore in the same period a year ago. "Operational resilience, contextual marketing with focus on in-home occasions and renovation of our core brands supported the top-line recovery," Diageo India MD & CEO Anand Kripalu said.

The third quarter reflects improving consumer sentiment over previous quarters, notwithstanding on-premise footfalls still being low, the route to market change in Andhra Pradesh and taxation led price hikes post COVID-19, he added.

Its Prestige and above segment net sales moderately declined in the latest December quarter, albeit lapping strong normal festive base comparatives while performance of Scotch portfolio continued to be encouraging.

"The third quarter witnessed benign commodities which, along with continued productivity, facilitated marginal expansion of gross margin to 44.6%," he said.

Kripalu said that despite a quicker rebound than originally expected in the near term, there are still reasons to remain cautious and consequently, it was not providing quantitative guidance for fiscal 2021.

"Our business continues to exhibit strong fundamentals and our focus to 'Emerge stronger' will hold us in good stead," he said.

As per USL's succession plan, Nagarajan would work closely work with Kripalu up to June 30, 2021.

Thereafter, Kripalu will step down as the Managing Director & Chief Executive Officer and cease to have board responsibilities.

"Effective July 1, 2021, Hina Nagarajan will assume office as the new Managing Director & Chief Executive Officer of the company in accordance with the applicable law and upon receipt of necessary approvals," it said.

Nagarajan, who had joined Diageo in the summer of 2018, is currently the Managing Director, Africa Regional Markets (ARM) of Diageo.

Prior to that, she had spent over 30 years in Consumer Packaged Goods (CPG) businesses and held several senior positions at Reckitt Benckiser (RB), Nestle India and Mary Kay India.

On January 27, shares of USL gained 1.60% to close at ₹644.75 on the BSE.

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