Emami Q2 pre-tax profit up 11%, misses street forecast due to slowdown

20% growth in international business helps firm post overall revenue growth, firm's brands improve market share despite tepid offtake

Amid muted consumer demand, Emami has performed financially according to Street estimates by posting an 11 per cent increase in its pre-tax profit at Rs 118 crore, even as revenue increased by 5 per cent to Rs 660 crore during the quarter ended September 30, 2019.

The same in the corresponding quarter of the last financial year stood at Rs 107 crore and Rs 628 crore, respectively. 

According to Abneesh Roy, executive vice-president at Edelweiss Securities, Emami had posted 1 per cent volume growth in its domestic business against the expectation of a flat growth in terms of sales volume.

Emami said the quarter posted soft growth due to challenging liquidity and consumption environment in the domestic business. However, its international business posted a 20 per cent growth during the second quarter (Q2) which led to the overall revenue increasing by 5 per cent.

“Despite constrained liquidity in trade channels and consumption environment, especially for discretionary products in the domestic business, the company posted good revenue growth with an improvement in profit margins during the quarter. We are happy that our CSD sales growth has bounced back and International performance has also been good with significant contribution by our latest acquired brand Creme 21,” Mohan Goenka, director at Emami, said.

One of its strongest brands, Navratna, declined by three per cent during the Q2 period albeit kmaintaining its market leadership with a 66 per cent market share in the category. The male grooming range, led by the He brand, also declined by 32 per cent owing to economic headwinds. The Kesh King range also declined by 11 per cent during the quarter under review due to slowdown in discretionary consumption

However, its other strong brands - BoroPlus, 7 Oils in One, the pain management brands and others posted growth which helped make up for the revenue. Although sales growth was lower in some of the key brands, the offtake was ahead of their respective categories, leading to market share gains.