India: United Spirits’ quarterly profit fails short of analysts’ estimates

India’s United Spirits reported quarterly profit below analysts' estimates on August 13, as higher marketing spends overshadowed affluent Indians' sustained demand for premium liquor.

The Indian arm of spirits maker Diageo reported a profit of 2.58 billion rupees ($29.50 million) for the quarter ended June 30, a fall of 14% from a year ago.

Analysts, on average, had predicted 3.03 billion rupees, according to data compiled by LSEG.

However, net sales value in United Spirits' premium segment, which includes Johnnie Walker whiskey and Tanqueray gin, rose 9% year-on-year, driving an 8.4% rise in overall sales value.

Affluent Indians, unperturbed by higher living costs, are splurging on everything from high-priced liquor to watches and jewellery.

'Premiumization' has lifted the profits of companies ranging from spirits sellers such as Radico Khaitan to department store chain Shoppers Stop.

Still, United Spirits' marketing spends grew 36%, while overall costs rose about 9%.

Its quarterly earnings before interest, taxes, depreciation, and amortisation (EBIDA) fell to 4.15 billion rupees from 4.58 billion rupees a year ago. Gross profit margin fell to 44% from 44.5% a year ago.