United Breweries slides after weak Q2 performance

United Breweries (UBL) declined 0.9% to Rs 942 after the beer maker posted a 97% slump in consolidated net profit to Rs 3.61 crore in Q2 September 2020 from Rs 114.78 crore in Q2 September 2019.

Consolidated net sales stood at Rs 899.9 crore in Q2 September 2020, falling 43% year on year from Rs 1579.55 crore in Q2 September 2019. The result was announced after market hours on Friday, 6 November 2020.

Profit before tax (PBT) slumped 95.3% to Rs 5.45 crore in Q2 September 2020 over Q2 September 2019. Total tax expense rose 22% to Rs 1.84 crore in Q2 September 2020 over Q2 September 2019.

UBL said Q2 witnessed resumption of supplies in all markets in a phased manner based on the state-wise lifting of lockdown. In September, "on trade" opened for the first time in a number of state since commencement of lockdown. Excise burden was reduced in states like Orissa and Andhra Pradesh which resulted in lower consumer prices.

The company said it recorded significant sequential volume growth. Volumes in Q2 were 48% lower than the corresponding period of last year. UBL said key markets like Karnataka, Tamil Nadu and Goa witnessed sharp recovery and posted volumes in September ahead of previous year.

Gross margins were higher by 16 basis points in Q2 September 2020 when compared with the same period last year on account of better state mix coupled with price increases to cover cost push. UBL said it was well positioned to navigate current circumstances with a leading market position, strong brand market portfolio and robust balance sheet. The company said it continues to remain optimistic about the long-term growth driver of the industry and is committed to strengthen its market position.

United Breweries is engaged in the manufacture and sale of beer.

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