Mumbai, November 9, 2024: Asian Paints announced a sharp 42.4% drop in its net profit for the September quarter (Q2FY25), reporting ₹694.64 crore, compared to ₹1,205.42 crore in the same quarter last year.
The company also saw a 5.3% decline in its total sales, which came in at ₹8,003.02 crore for the quarter, down from ₹8,451.93 crore in Q2FY24.
In a statement, Amit Syngle, Managing Director and CEO of Asian Paints, explained that the paint industry had a tough quarter, with weak demand. The company’s domestic coatings business saw a slight drop in volume, and overall sales in this segment fell by 5.5%. The slowdown was mainly due to weaker consumer spending and the impact of heavy rains and flooding in parts of India.
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Profit and Margin Decline
The company’s profit before interest, taxes, and other expenses (PBDIT) dropped by 27.8% to ₹1,239.5 crore, compared to ₹1,716.2 crore last year. This caused a drop in the PBDIT margin, which fell to 15.5% of net sales, from 20.3% in the same period last year.
Syngle explained that higher material costs, price reductions taken last year, and rising sales expenses affected the company’s margins. While the company raised prices during the quarter, Syngle said the full impact of these price increases would be seen in the second half of the year.
“We expect margins to recover in the coming months as material costs come down and our recent price hikes take full effect,” Syngle added. “Despite tough demand conditions, we’re focused on using our strong brand, supply chain, and distribution network to drive growth.”
Segment Performance
Looking at the company’s other business segments, the international coatings segment saw a small drop in sales of 0.7%, mainly due to macroeconomic challenges and currency fluctuations in markets like Ethiopia, Egypt, and Bangladesh. However, in constant currency terms, sales in this segment grew by 8.7%.
In the bathroom fittings business, sales increased by 2.1% to ₹83.1 crore, but the segment recorded a higher loss in PBDIT, which stood at ₹5.8 crore compared to ₹2.1 crore last year.
The kitchen business saw an 8.8% increase in sales, reaching ₹105.3 crore, but it reported a small PBDIT loss of ₹0.1 crore, compared to a profit of ₹0.9 crore last year.
Other divisions, including White Teak and Weatherseal, showed positive results. White Teak’s sales grew by 19.2% to ₹31.1 crore, while Weatherseal’s sales rose 4.8% to ₹13.2 crore.
Interim Dividend Announced
Despite the lower profits, Asian Paints declared an interim dividend of ₹4.25 per share for FY25. The record date for shareholders to be eligible for the dividend is set for Tuesday, November 19, 2024. The dividend will be paid out on or after Thursday, November 28, 2024.
Looking Ahead
While demand remains soft, Asian Paints is optimistic about a recovery in the coming months. The company is focused on leveraging its brand strength and efficient supply chain to keep growing, even in challenging conditions.
Disclaimer: The views and recommendations expressed in this report are those of individual analysts, experts, and brokerage firms. Investors are advised to consult certified financial advisors before making any investment decisions.
