Emami's Q4 net declines 45%; revenue increases by 21%

The decline is due to sharp rise in amortisation of the Kesh King brand

A young target audience helped Emami Ltd post a healthy rise in topline during the quarter ended March 31, 2015, but amortisation of Kesh King intangibles has hit net profit in the same quarter.

Although during January-March this year, the company's turnover rose by over 21 per cent at Rs 671 crore as against Rs 554 crore in the year-ago period, net profit fell by nearly 45 per cent at Rs 76 crore as compared to Rs 138 crore in the same months of 2015 mainly on account of the sharp rise in amortisation of the Kesh King brand.

The cash profit, however, rose by over 11 per cent at Rs. 166 crore as against Rs. 149 crore in the year-ago period. In the quarter under review, amortisation of acquired trade marks and brands rocketed high to Rs. 73 crore as against Rs. 1 crore in the January-March timeframe last year.

"This quarter, we have secured good growth by focusing on young target audience, where we see a huge potential and we want to keep investing in newer categories like face wash, deodorant etc apart from our core brands", Harsha V Agarwal, director at Emami said.

Despite the high increase in its spends on advertising and promotions which stood at 19 per cent of sales, the company's EBIDTA margins at just over 27 per cent rose by 190 basis points (bps) in the fourth quarter and by 170 bps at over 26 per cent during the year ended March 31, 2016, mainly on account of gross margin expansion.

As per the company, extended winters were positive for brands like BoroPlus which feature as winter brands but this in turn led to an adverse impact on the sales of summer products during the fourth quarter of 2015-16.

"Going forward, we will continue to strengthen our core portfolio and focus on top line growth. We are also strengthening our distribution network to expand our presence further to the deepest corners of the country. Our international business continues to do well," Mohan Goenka, director at Emami said.