UPL net profit up 29% on strong sales but margin stays near flat

1 Aug 2022

A significant rise in input costs dented what was otherwise a good earnings performance by agrochemical company UPL in the quarter ended June. 

Barring a marginal contraction in operating margin the company’s topline, operating profit and bottomline recorded high growth rates.

In Apr-Jun, UPL’s consolidated net profit went up by 29% on the year to 8.8 bln rupees. It was much higher than analysts’ estimate of 6.2 bln rupees.

The consolidated revenue from operations of the company jumped 27% to 108.2 bln rupees beating analysts’ estimate of 95.8 bln rupees.

Sequentially, UPL’s consolidated net profit was down 36% while its consolidated revenue was down 32%.

The volume of the company increased by a small rate of 6% on the year but an 18% jump in product realisations led to the strong rise in the company’s revenue.

The operational performance of the company was mixed. 

The earnings before interest, tax, depreciation, and amortisation rose 26% on the year to 23.4 bln rupees in the June quarter. But the EBITDA margin contracted marginally to 21.6% from 21.9% a year ago.

According to UPL’s chief executive officer Jai Shroff the EBITDA margin was flat as the June quarter saw “significant input cost inflation and a challenging macro-economic environment.”

He said that the “strong agri commodity prices drove significant uptick in price realizations.”

UPL’s revenues were driven by strong rise in sales in Latin America, North America and other parts of the world excluding Europe and India.

With one-third share of total revenue the Latin American sales of UPL jumped 38% on the year to 34.6 bln rupees in Apr-Jun, while North American sales rose substantially by 47% to 18 bln rupees. 

The Europe sales were moderate with a 13% increase to 17.3 bln rupees while domestic sales were muted, going up by 8% to 20.7 bln rupees.

The rest of the world sales of the company stood at 17.7 bln rupees, up 31% on the year.

UPL has revised its revenue growth guidance for the current financial year 2022-23 (Apr-Mar) up at 12-15% from 10% earlier.