Pidilite Industries Ltd (PIL) reported a 9 per cent y-o-y growth in 1QFY16 consolidated revenues to Rs.1,470 crore on the back of a 5 per cent volume growth (5.3/8 per cent in 4Q/3QFY15) in consumer and bazaar (C&B) business. The consolidated C&B/industrial segment revenue grew 9.4 per cent/.7 per cent. The overseas business grew 7 per cent (4Q — 10 per cent) in constant currency terms.
Lower VAM (vinyl acetate monome) prices and inputs linked to crude led to gross margin expansion of 515 bps to 49.1 per cent (highest for any quarter in 5 years). Operating profit margins rose 550 bps to 23.4 per cent (highest ever) supported by lower ad spend (down 30 per cent y-o-y; at 2.5 per cent of sales) as PIL chose to phase out ad budget. Blended price hike stood at 2.5 per cent. Adjusted net profit grew 30 per cent to Rs.230 crore.
C&B volumes continue to remain muted and recovery will be gradual. Soft raw material prices, potential urban recovery and strong pricing power is expected to help PIL perform better.
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