Britannia 2nd quarter net down 39%

For the second successive quarter, Britannia Industries, reported a significant drop in its net profit as it tries to battle against “unabated inflation in commodities”.

Britannia, which is among the largest buyers of wheat and sugar, has said that inflation has resulted in a sharp dip in its bottom line by 39 per cent to Rs 64.7 crore for the second quarter of 2010-11. The drop during the second quarter follows a 30 per cent fall in net profit during the first quarter of 2010-11, compared to the corresponding quarter of 2009-10.

The company has reported a 27.5 per cent growth in sales to Rs 1,094 crore for the period backed by its strategy to accelerate volume and revenue growth ahead of the total industry growth. During the first quarter of 2010-11, revenue was up 20 per cent. Consumption of raw materials increased by 36 per cent to Rs 642 crore as its Ebitda fell by 34 per cent to Rs 45 crore.

Vinita Bali, MD, Britannia said: “In an intensely competitive market we continue to accelerate volume and revenue growth ahead of the total industry growth. Unprecedented and unabated inflation in commodities has adversely impacted industry margins and our focus is on driving cost effectiveness, operational efficienceis and better sales mix for margin improvement. Our innovation pace has also increased with several new launches to tap new opportunity segments.”

The company has been facing intense competition from Parle and ITC Foods. Even as it trails in the glucose segment way behind Parle, it is trying to improvise its offerings to sustain its marketshare in this mass volume segment to derive more value for its offerings.

Britannia is also trying to get a foothold with its recent launches in the snacks segment, where ITC Foods is gaining share by extending its offerings.