Tata Coffee posts 24.9% fall in June quarter profit

Bangalore-based Tata Coffee on Tuesday announced a 24.9 per cent fall in consolidated net profit to Rs 30.31 crore for the quarter ended June 30, compared with Rs 40.38 crore in the year-ago quarter.

Total income from operations is lower by 11 per cent at Rs 374.52 crore during the first quarter of 2014-15, against Rs 418.46 crore in the corresponding period last year. Earnings per share stood at Rs 16.23.

Lower profits in the June 2014 quarter reflect the lesser quantity of crop available for sale in the plantation business on account of lower production of coffee, tea and pepper during the previous season, which had witnessed distinctly unfavourable weather conditions. However, the instant coffee business saw good volume growth, aligned to the company’s strategy of driving significant growth of value-added products, Tata Coffee said in a statement.

Income and profitability of the plantation segment were impacted during the quarter under review on account of lower plantation output available for sale. This was caused by adverse weather as well as by the fact that the previous financial year was an ‘off-year’ in the biennial production cycle of coffee and pepper.

The instant coffee segment reported good top line growth with revenues standing at Rs 86 crore for the quarter, compared with Rs 76 crore in the year-ago period. This was largely driven by higher sales of instant coffee to new geographies.

During the first quarter of FY15, the instant coffee business commissioned its new aroma agglomeration plant, which will cater to the premium agglomerated coffee customers. Commenting on the performance, Hameed Huq, managing director of Tata Coffee, said: “The focus on value-addition and superior offerings is producing good results, as demonstrated by the growth in sales of instant coffee. Our premium value propositions have allowed us to gradually move away from commodity price volatilities. The global instant coffee market is showing steady recovery after a slowdown in some markets. The new capacities we have put in place will help us strongly leverage such growth.”

MIXED TASTE

• Lower profits in the June quarter reflect the lesser quantity of crop available for sale in the plantation business
• The instant coffee segment reported good top line growth with revenues standing at Rs 86 crore for the quarter, compared with Rs 76 crore in the year-ago period