Adani Wilmar shares in focus as Q1 revenue falls 15% on weak edible oil prices
Adani Wilmar said its risk management framework mitigated the impact of falling prices on its gross profits to an extent, but high-cost inventory exerted pressure on profitability.
Shares of Adani Wilmar will be in focus on Thursday morning after the Adani group firm said its sales fell 15 per cent on year-on-year basis due to a sharp decline in edible oil prices, even as volumes jumped 25 per cent for the quarter. Edible oil and industrial essentials segments witnessed 15 per cent de-growth in revenues, the company said.
Edible oil prices have fallen by more than 50 per cent in less than one year. In the June quarter, the price of edible oils saw a decline in the range of 5 per cent to 20 per cent sequentially, before recovering as the quarter came to a close.
Adani Wilmar said its risk management framework has mitigated the impact of falling prices on its gross profits to a significant extent, but high-cost inventory in an environment of falling prices exerted pressure on profitability throughout the previous financial year, and this trend persisted in June quarter as well.
Adani Wilmar noted that the base quarter (June quarter last year) saw demand disruption led by high edible oil prices with the onset of the Russia-Ukraine conflict. On a sequential basis, the volume growth was strong, it said.
The decline in the price of edible oils has had a stimulating effect on consumer demand in India, which has been robust for the last three quarters, Adani Wilmar said.
“Unseasonal rains and hailstorms in key wheat producing states have adversely impacted the crop quality. Its impact on the quantity of output is yet to be ascertained by government agencies. Wheat prices have gone up during the quarter, prompting the government to release wheat in the open market from its stock to cool down prices. The ban on wheat export continues,” Adani Wilmar said.
The Adani group firm said its Food & FMCG segment recorded a revenue growth of 30 per cent-plus YoY to cross Rs 1,000 crore mark for the quarter on a standalone basis. This was the eighth consecutive quarter with 20 per cent-plus volume growth and 30 per cent-plus revenue growth, on YoY basis, for the Food & FMCG segment.
“Both urban and rural areas have witnessed strong demand. The oil and foods continued to grow at a rapid pace in the alternate channels (E-com, MT, eB2B etc.) and recorded around 50 per cent YoY volume growth for the quarter. The company kept its focus on expanding the distribution of both oil and food products in the General Trade channel. The sale of branded products to HoReCa clients continued to grow strongly with distribution expansion in more cities and acquisition of new client accounts,” it said.
