United Spirits Q4 Results 2022: Net profit grew at Rs.136 Crores for Q4FY22

On 27th May 2022, United Spirits announced its quarterly results for the last quarter of FY2022.

Key Highlights:

Q4FY22:

- Net sales increased 9.5% lapping a strong prior year comparator driven by resilient consumer demand in off-trade and gradual on-trade recovery. 

-  Prestige & Above net sales grew 15.3% benefitting from premiumization, ongoing portfolio renovation, and accelerated momentum in states with the route to market unlock.

- Popular net sales grew 1.1% while Priority states were broadly flat. 

- The gross margin was 41.7%, down 220bps; impacted by rising inflation partly offset by favorable product mix and productivity savings. 

- EBITDA was Rs. 427 Crores, up 3.6%. EBITDA margin was 17.5%, down 99 bps, driven by the gross margin decline partially offset by leverage on operating costs.

- Profit after tax was Rs.136 Crores and PAT margin was 5.6%.  

FY2022:

- Reported net sales increased 18.9%. Growth was underpinned by strong consumer demand in the off-trade, premiumization, recovery in on-trade, and lapping soft comparators. Underlying net sales increased 18.4%, excluding the one-off sale of bulk scotch. 

- Prestige & Above net sales increased 23.6%, primarily benefiting from a favorable product mix. - Popular net sales increased by 8.2%, while the priority states increased by 7.1%. 

- The gross margin was 43.6%, up 25bps, primarily driven by a favorable product mix, productivity savings from everyday cost efficiencies, and lapping a one-off inventory provision. 

- Marketing investment at 7.3% of reported net sales. It was up 25.7% to support brand-building activities while lapping a prior year's reduction due to COVID-19. 

- Reported EBITDA was Rs. 1,511 Crores, up 53%. The reported EBITDA margin was 16.1%, up 358 bps primarily driven by fixed cost operating leverage and lapping one-off costs in the prior year.

- Profit after tax was Rs. 770 Crores, up 148.1% and PAT margin was 8.2%.  

Ms. Hina Nagarajan, the CEO, commenting on the results said: "We have delivered another quarter of consistent top-line and resilient EBITDA performance. The broad-based growth in the Prestige & Above segment demonstrates resilient consumer demand, the strength of our portfolio, and the focused execution of the strategy by the team. Strong cash flow generation is enabling reinvestment in sustainable long-term growth. 

In line with our strategy of continued portfolio premiumization, innovation, and commitment to sustainability, we launched ‘Godawan’, an artisanal single malt whisky. Godawan translates to the Great Indian Bustard, now nearing extinction and we are aiding in the conservation of the species and restoring natural water resources in Rajasthan. We also acquired a strategic minority stake in Nao Spirits & Beverages Private Limited, an emerging craft gin company in India, with award-winning brands ‘Greater Than’ and ‘Hapusa’. The investment provides us with an opportunity to strengthen participation in the fast-growing premium gin segment in India. 

We have just concluded the strategic review of the select Popular brands and the Board has approved the sale and franchising of this portfolio to an unrelated third party. This is a significant move to enable sharpened focus on ‘Prestige & Above’ and reshape our portfolio to help deliver our growth mission. 

Looking ahead, while we see macroeconomic uncertainty persisting in the near term driven by inflationary headwinds and geopolitical factors, we remain confident in the medium to long-term prospects of our industry. We remain focused on driving productivity and increasing the intensity of our engagement with states on price increases while remaining disciplined in the execution of our strategic priorities, to drive sustainable profitable growth and value for all our stakeholders.”