Fevicol maker Pidilite’s Q3 profit drops 20% as input costs climb

Pidilite Industries Ltd said on Tuesday its net profit for the fiscal third quarter fell almost 19%, as a rise in expenses offset the increase in revenue.

The maker of Fevicol and other adhesives said consolidated net profit for the quarter ended Dec. 31 declined to Rs 359 crore from Rs 446.43 crore a year earlier.

Third-quarter profit was also down from Rs 375.5 crore in the second quarter.

Consolidated revenue from operations grew to Rs 2,850.72 crore from Rs 2,299 crore a year earlier and Rs 2,626 crore in the second quarter.

The maker of adhesives, sealants and construction chemicals said that robust double-digit revenue growth in this quarter was led by staggered pricing actions and steady demand conditions.

Growth was broad-based across consumer and bazaar (C&B) and business-to-business (B2B) segments, with growth in urban areas outpacing rural regions. The C&B segment reported growth across all categories. B2B growth was led by continued momentum in industrial activities.

However, total expenses climbed to Rs 2,372.90 crore from Rs 1,719.75 crore a year earlier. This was led by a jump in material costs to Rs 1,438 crore from Rs 948.61 crore.

Gross margins continue to get impacted on account of unabated increase in input costs, the company said.

Pidilite’s tax expenses, meanwhile, fell during the quarter to around Rs 128 crore from Rs 154 crore in the corresponding period a year ago.

The company said that it continued to make investments in its brands and maintained its EBITDA margins within its historic range through “judicious pricing, rising volumes, and operational efficiencies.

Other key highlights:

1) Net sales for the nine months ended Dec. 31 stood at Rs 7,382 crore, up 47% over the same period last year.

2) EBITDA before non-operating income for Q3 at Rs 550 crore, down 14% over the same quarter last year.

3) EBITDA for the nine months stood at Rs 1,457 crore and grew by 19% over the same period last year.

4) Q3 profit before tax and exceptional items at Rs 487 crore declined by 19% over the same quarter last year.

5) PBT for the nine months through December was Rs 1,268 crore, up 14% over the same period last year.

6) Profit after tax for the nine months stood at Rs 952 crore, up 16% over the same period last year.

Management commentary

Bharat Puri, Managing Director at Pidilite Industries, said this quarter registered strong broad-based volume and value growth across categories and businesses.

“Continued, unprecedented inflation in input costs necessitated calibrated pricing actions as well as the need to manage costs aggressively to maintain margins in a healthy range,” he said.

Going forward, the company expects near-term demand conditions to be a little more challenged, given the disruptions as a result of the pandemic as well as input inflation to continue.

“However, we see demand conditions improving as well as input costs moderating by the end of the current quarter/beginning of the new financial year. We remain confident of the medium to long-term potential of the Indian home improvement sector and in our ability to deliver profitable volume growth,” Puri said.