UPL Ltd Q2 net loss at Rs 189 cr, destocking drives revenue decline

Agro-chemical firm UPL Ltd on Monday posted a consolidated net loss of Rs 189 crore for the second quarter of 2023-24 as global channel destocking' drove revenue decline.

The company had clocked a net profit of Rs 814 crore in the same quarter previous fiscal, according to a regulatory filing.

Total income in the quarter under review was Rs 10,170 crore. In the year-ago period, it was Rs 12,507 crore.

From India operation, the company's revenue was Rs 1,387 crore during the quarter. In the year-ago period, it was Rs 1,809 crore, the filing said.

The global agrochemical industry continues to go through a difficult phase with prices coming off significantly vis--vis the high base of the previous year amid the elevated channel inventory levels and intense price competition," UPL Corporation Ltd CEO Mike Frank said.

Against this backdrop, the distributors prioritized destocking, and focused on purchases at lower prices to bring down their average inventory cost.

In particular, destocking had a significant impact in the US and Brazil during the first half of the year, he said.

"Our revenue and profitability for Q2 were significantly impacted by these factors in line with rest of the industry," Frank said.

Going forward, the company is optimistic of progressively improved performance in H2 of this fiscal as key geographies of North America, Latin America and Europe enter major cropping season.

The elevated inventory levels are expected to gradually subside with the farm gate demand continuing to be robust.

In Europe, Asia, and Latin America (ex-Brazil), channel inventory levels have largely normalized; while in North America and Brazil, the scenario continues to gradually improve, he added.

On the pricing front, Frank said most post patent molecule prices seem to have bottomed in Q2 and are now stabilizing.

"Overall, we are executing well in this challenging market and making changes to our operating model that will further improve our business as the cycle normalizes," he added.

The company's shares settled at Rs 538.40 apiece, down 3.64 per cent on BSE.