Britannia Industries, one of India’s leading biscuit makers, reported a significant decline in net profit for the third quarter of FY24. The company’s net profit dropped by 40% to Rs 932.4 crore, compared to Rs 1,555.6 crore in the same quarter last year. This decline in net profit can be attributed to various factors, including intense regional competition, price cuts, and subdued rural demand.
Despite the challenging market conditions, Britannia managed to achieve a 2% increase in sales during Q3 FY24. The company implemented price cuts to counter intensifying regional competition and drive higher volume growth, particularly in rural markets. Britannia’s revenue from operations for the quarter stood at Rs 4,102 crore.
The rural demand for fast-moving consumer goods (FMCG) was affected by an uneven monsoon, which impacted Britannia’s sales in rural areas. However, the company continued to expand its direct reach and accelerate its rural journey by partnering with over 29,000 rural distributors during the quarter. Britannia’s focus states outperformed other regions in terms of growth, despite the generally subdued rural demand.
Britannia’s net profit decline in Q3 FY24 reflects the company’s resilience and competitiveness in a progressively recovering demand environment. Despite the challenges, Britannia has shown consistent growth, with a 9% increase in revenue and a 52% increase in operating profit over the past two years. The reported net profit of Rs 932.4 crore for Q3 FY24 was slightly lower than the Bloomberg estimate of Rs 952.8 crore. Over the past six months, shares of Britannia Industries have risen by 7.62%.
RTM Watch’s Take
Britannia Industries’ Q3 FY24 results reflect the challenges faced by the company in a competitive market environment. The decline in net profit can be attributed to factors such as intense regional competition, price cuts, and subdued rural demand. However, Britannia’s ability to maintain sales growth and expand its direct reach in rural areas demonstrates its resilience and competitiveness. Going forward, the company’s focus on driving market share and capitalising on the power of its brands will be crucial for sustaining growth in the FMCG sector.
