India: United Breweries sees net profit increase in quarter to end March 2022

Heineken NV-backed beer maker United Breweries has registered a consolidated net profit of ₹163.78 crore for the quarter ending March 2022 (Q4FY22) period compared to a profit of ₹97.53 crore in the same quarter last year - representing a growth of 67.9%, The Mint reported on April 27.

Consolidated revenue from operations stood at ₹3,664.71 crore in Q4FY22, marginally up by 1.28% from ₹3,618.09 crore in the corresponding period of the previous year.

In its audit report, United Breweries said that the "fourth quarter witnessed robust year on year and sequential growth of 7% and 14% respectively. The growth was mixed during the quarter with January being muted due to the impact of the Omicron COVID variant, while March showed a promising start of the peak season."

As per the company's data, three regions recorded growth in the fourth quarter, the Northern region recording a stellar 26% growth driven by UP, Rajasthan, and Haryana, markets in the South followed with 8% growth due to strong performance in Telangana and East recorded 2% growth comprising healthy growth in all states except for a decline in West Bengal on account of the change in the route to market. West declined by 11%.

Meanwhile, United Breweries highlighted that gross margin during the quarter was lower by 330 bps as compared to the corresponding quarter of the previous financial year due to inflationary pressures witnessed in the prices of malt, packaging materials, and crude oil. The commodity cost picture remains challenging and volatile. The Company is in the process of securing price increases in combination with continued cost measures to mitigate this impact.

As part of the drive to optimize costs, the company has stopped NAB production in the manufacturing facility in Bihar and moved to a third-party facility.

United Breweries said CAPEX plans to be subdued with a focus on the completion of key ongoing projects, safety, and sustainability with annual spending limited to ₹173 crore. Combined with higher profitability and further improvements in working capital balances, free operating cash flow for the year was at a record ₹721 crore, up from the prior year's ₹440 crore.

"Cash balances are circa ₹850 crore and all term debt has been repaid," United Breweries said in the report.

The company's board of directors has proposed a dividend of ₹10.50 per share in the next AGM - representing circa 75% payout of profit after tax, significantly up from historic ranges.

On BSE, on April 27, United Breweries shares were trading at ₹1532.95 apiece marginally down. The shares have been floating between an intraday high and low of ₹1580 apiece and ₹1507.90 apiece respectively.

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