India’s United Spirits posts Q1 profit jump on tumbling expenses, premium sales

BENGALURU (Reuters) – India’s United Spirits, which sells the Smirnoff brand of vodka and the Black Dog brand of whisky, reported a more-than-22% jump in Q1 profit on Thursday, as tumbling costs outpaced slowing demand and sales in its premium segment grew.

The Bengaluru-based company’s profit rose to 2.38 billion Indian rupees ($29.05 million) in the quarter ended June 30 from 1.95 billion rupees a year ago.

Total expenses sank about 26% to 49.97 billion rupees, led by a 25% fall in costs of raw materials and a 33% decrease in excise duty spends.

Falling expenses outpaced revenue from operations, which fell 23% to 53.13 billion rupees, as the company witnessed slowing demand for its liquor brands such as McDowell’s No. 1, Vat 69 and Royal Challenger.

United Spirits, which, in May, had expected consumption demand to stay resilient on social activity bouncing back, witnessed a third straight quarter of sliding topline.

CEO and managing director Hina Nagarajan said in a statement that while inflationary pressures remained, the company’s focus was on driving growth across the ‘Prestige and Above’ segment.

The Diageo PLC-owned firm’s rebased net sales grew 17.4%, the company said, helped by tailwinds of premiumisation.

Sales in the company’s mainstay ‘Prestige and Above’ segment, which houses brands such as Johnnie Walker, Signature and Antiquity, rose 21.2%.

Its ‘Popular’ segment, which made up 10.4% of Q1 net sales, rose a bare 0.9%.

($1 = 81.9342 Indian rupees)

(Reporting by Hritam Mukherjee in Bengaluru; Editing by Janane Venkatraman)