Analyst Meet / AGM - Analyst Meet

05-Feb-2015, 12:11
Britannia Industries held an analyst meet to discuss its Q3 FY15 results.

Highlights-

• The standalone net sales for December 2014 quarter increased by 14% to Rs 1852.33 crore. OPM has increased by 136 bps to 10.5%. The profit before tax and EO has increased by 37% to Rs 188.92 crore. The net profit has increased by 25% to Rs 120.52 crore due to growth in top-line, expansion in OPM, rise in other income and EO item.

• The consolidated revenue for December 2014 quarter has increased by 13% to Rs 2033.28 crore. OPM increased by 188 bps to 10.8%. The profit before tax and EO has increased by 45% to Rs 205.63 crore. The net profit has increased by 37% to Rs 137.28 crore.

• The company's 2/3^rd of sales came from volume.

• On raw material side for Q3, flour price was largely stable in last 2 quarters while sugar, refined oil, butter and skimmed milk powder prices has seen drop in last 3 quarters. Cashew price has increased in last 3 quarters. The company has pass on the benign commodity prices by increasing the grammage.

• The company delivered 2x to FMCG & Foods category, growth led by its pillar brands - Good day, Nutrichoice, Milk Bikis & Marie.

• From the month of October 2014, FMCG, Food and Biscuit category has shown declining trend in value term. Biscuit industry has grown by just 4% in December month vs 7-8% in October month.

• The company remains focused on Go-to-market strategy with split route in urban now at 25% of sales and rural distribution up by 50%. Distribution expanded with increase in direct reach to 1 mn outlets along with go-to-market strategy. The company's direct outlet coverage has increased by 20%.

• The company will continue to focus behind pillar brand like Good Day and Nutri Chocie. The company has increased its ASP in last 2 years by cutting spend on things like trade load and investing more in brand building.

• Innovations continued with launch of Good day chunkies & Nutrichoice heavens. The company is introducing new products mostly in its pillar brands.

• The company has reduced market return by 30-35% by focusing on waste reduction program.

• In the energy optimization, the company want to cut its energy bill which is around Rs 200 crore annually, by 15-20%.

• The company remains aggressive on capacity expansion and increasing share of in-house manufacturing. In the medium term, it plans to increase its share of in-house manufacturing to 60% from currently at 40-45%.

• The company has earmarked capex of Rs 400 crore over next 2 years in Tamilnadu and Karnataka, which would entail increasing capacity by 150 tons to its current capacity of 900 tons.

• The company is also setting up a Research & Development facility for about Rs 50 crore, to be based in Bangalore.

• The company has simplified its management and senior leadership structure

• The mgmt said the company's reach was very poor in entire Hindi speaking belt in the country due to distribution issue as mostly it had rural region and also due to product portfolio. With focus on rural distribution and placing its products at right price like Rs 5 - Good Day biscuit pack the company is able to registered growth of more than 20% in these states.

• International operations, dairy and other businesses (cakes & rusks) reported healthy revenue and profit growth in the quarter. The company foresees huge opportunity in dairy market and is getting aggressive in this space.

• The mgmt said that there is hugh opportunities in dairy business (market size is Rs 7500 crore), cakes business, Rusk business (Rs 6000 crore market size, leader in organized market) and intentional business by exploring various geographies. The company has 2 factories in Egypt and it exports 75 countries. Also added that there lies hugh opportunities in biscuit business itself whose market size is Rs 2500 crore..

• The company's 5% revenue comes from international business. It also provides hugh opportunity for growth.

• The company's around 9% revenue is from value brand.

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