Britannia Industries Limited reported a 23 percent year-on-year decline in its consolidated net profit to Rs 384.22 crore for the quarter ended September, which was below analysts' expectations of Rs 447 crore.
The company consolidated total revenue from operations, however, rose 5.5 percent on-year to Rs 3,607.4 crore for the reported quarter, which was largely in line with estimates. Like other FMCG companies, Britannia faced rising cost pressures during the September quarter.
The company's raw material cost for the quarter rose over 8 percent on-year to Rs 1,914.7 crore, which was higher than the growth in revenues. However, other expenses in the quarter remained largely flat, likely on the account of trimming down of promotional costs by the company.
"During the quarter, the impact of the second wave of Covid-19 started receding, and the economic activity started picking up. However, inflationary trends remained rampant around the globe, across sectors, " the company said in its earnings statement.
"While we have been able to partially mitigate the impact through strategic forward covers and accelerated cost efficiency programs, we have also initiated necessary price increases across the portfolio all of which will address the cost-push and normalize profitability," it said.
Britannia said that it is witnessing "unprecedented inflation" in market prices of key ingredients like palm oil, industrial fuel, and packaging material. The surge in costs reflected badly on the company's operating performance in the quarter as consolidated operating profit slumped 17.4 percent year-on-year to Rs 558 crore.
The FMCG company's margins shrank 430 basis points on-year to 15.5 percent reflecting the pain of rising input costs. Shares of the company ended 1.7 percent higher at Rs 3,715.1 on the National Stock Exchange.