Britannia Reports 47% Jump In Profit, Initiates Price Cuts

Consolidated sales during the quarter ended 31st March 2023 grew 11% to Rs. 3,892 crores, versus ₹3,508.35 crore reported in the year ago period. Gross margins expanded by 688bps year-on-year to 44.9%. EBITDA grew by 45.7% year-on-year.

Revenue growth during the quarter was driven by “significant distribution gains," the company said. “We continued to accelerate our rural journey with focus on enhancing reach, partnering with 28,000 rural distributors, and sustaining our diligent market practices...We supported our brands and innovations with the requisite investments in the digital and mass media space," Varun Berry, Vice Chairman & Managing Director, said.

Softening of material prices in the second half of the fiscal along with stepped-up cost efficiencies helped the company report improved operating margins this quarter.

“On cost and profitability front, input prices softened on the back of correction in palm oil and packaging materials, while flour continued to trend higher. Our intensified cost efficiency program coupled with moderation in commodity inflation led to a healthy operating margin in this quarter. We are being vigilant of the competitive actions in the marketplace and closely monitoring the commodity situation in the country, especially around wheat and sugar. We shall deploy appropriate pricing actions to remain competitive and drive market share growth," Berry said.

Berry said the biscuit maker may consider price reductions to spruce up volumes going forward. Price reductions have been initiated across certain brands and pack sizes.

“There was some softening of the real prices in the second half of this year. We also stepped up cost efficiencies and we are also evaluating, if there’s some corrections in price that we need to make. So, outlook is that we will remain relevant on competitive pricing actions and we will closely monitor the price of wheat and sugar and deliver wherever necessary. We will make the right decision on if there is a price reduction required. There are certain brands and certain packs that have already initiated price reduction or promotion and we will continue to work and see what needs to be done as we move forward," Berry said.

Meanwhile, the company’s croissant business crossed Rs100 crore in sales post a national launch. The company commercialized two biscuit greenfield units during the quarter, in Uttar Pradesh and Tamil Nadu, along with a brownfield expansion in Orissa. The move is is line with its strategy to make in-house, exclusive range of products, and step up productivity. The company also commercialized three new lines for rusk.