United Breweries posts 94.03% slump in Q4 profit on higher input costs

India's United Breweries Ltd reported a 94.03% slide in fourth-quarter profit on Thursday, hurt by higher raw material costs.

The liquor maker, partly owned by the Dutch brewer Heineken, said its standalone profit fell to Rs 9.73 crore ($1.19 million) in the three months ended March 31, from Rs 163 crore a year earlier.

Total expenses rose nearly 18% following a 32% spike in raw material costs.

"Gross margin during the quarter was lower as compared to previous year due to continued inflationary pressures on our cost base, particularly on prices of barley and packaging materials," said the brewer in a statement.

Why it matters

India's alcohol and beverage industry has been battling high raw material inflation, with prices of everything from glass to extra neutral alcohol (ENA) or rectified spirit, a primary raw material for making alcoholic beverages, inching up every quarter.

United Breweries, which sells beer under labels like Kingfisher and Cannon 10000, saw its revenue growth slow from about 96% in the first quarter, when sales jump in the summer months, to 5.4% in the third quarter, which includes the onset of winter.

The slowing revenue growth and rising expenses pushed the company to its first loss in 10 quarters in the October-December period.