Adani Wilmar's Q2 losses reach Rs 131 crore due to a more than 13% drop in sales

Adani Wilmar's Q2 losses reach Rs 131 crore due to a more than 13% drop in sales

Compared to a net profit of Rs 79 crore during the same period last year, the FMCG firm posted a net loss of Rs 131 crore.

Adani Wilmar reported robust double-digit volume growth in its Q2 business update, coinciding with an increase in rural sales.

Adani Wilmar had a substantial decline in sales over the previous year, which caused it to go from making a profit of Rs 49 crore to a loss of Rs 131 crore in the quarter that ended on September 30.

Operating revenue for Adani Wilmar decreased 13.3% year over year to Rs 12,267.15 crore from Rs 14,150.03 crore. Despite a decrease in overall costs to Rs 12,439.45 crore in the quarter, the losses were not sufficiently offset.

Earnings before interest, taxes, depreciation, and amortization, or EBITDA, were Rs 144 crore, down 43 percent from the previous fiscal year's Rs 254 crore. From 1.8 percent to 1.2 percent, the margin decreased by 60 basis points in the last year.

Although higher margins in the Food & FMCG and industrial vital categories somewhat offset the loss in the edible oil category, the business said that the loss had a negative effect on profitability. Divergent patterns in the spot (physical) and future prices are the main cause of the losses in the edible oil industry, which leads to hedging losses.

Adani Wilmar said that they anticipate edible oil profitability to return to normal levels in terms of gross margin as well as EBITDA per ton going ahead, given the narrowing gap between spot and future pricing. Its profitability trend is anticipated to continue with food and FMCG and industrial basics.

Distribute the act

Adani Wilmar shares fell 47% to a 52-week low of Rs 303.1, nine months after US short-seller Hindenburg Research predicted an 85% decline in Adani share price. By contrast, throughout the same time, investors saw double-digit gains from the blue-chip Nifty 50 index.

Q2 financial summary

Adani Wilmar had double-digit volume growth, coinciding with an increase in rural sales. Nonetheless, year over year (YoY) growth in volume was not accompanied by a fall in sales value.

The volume of Adani Wilmar's edible oil sector increased by 5% during the second fiscal quarter of FY24 compared to the previous year, while the value growth decreased by 19%. Regarding Q2, the segment's share of the company's standalone sales was around 74%.