BENGALURU (Reuters) – India’s top agro-chemical producer UPL Ltd on Monday reported an unexpected loss in the second quarter, hurt by weak demand, channel destocking and competition from China, sending its shares down nearly 5%.
The herbicides and insecticides maker swung to a consolidated net loss of 1.89 billion rupees ($22.71 million) in the quarter ending Sept. 30 from a profit of 8.14 billion rupees a year earlier. Analysts had expected a profit of 4.64 billion rupees, according to LSEG data.
UPL shares, which have lost nearly a quarter of their value so far this year, fell as much as 4.8% after the results.
The Mumbai-based company’s revenue from operations fell around 19% year-on-year to 101.70 billion rupees. Revenue from the biggest segment, crop protection, fell nearly 21%.
UPL, which has presence in more than 130 countries, saw its revenue from all regions falling.
Revenue from Latin America, which contributes nearly half the sales, dropped more than 17%.
Distributors prioritising destocking – process of emptying out excess inventory levels following low demand – especially in U.S. and Brazil, and buying at lower prices hit the company’s revenue and profitability in line with rest of the industry, UPL Chief Executive Officer Mike Frank said in a statement.
Analysts at Jefferies had predicted, in a pre-earnings note, a weak fiscal 2023-2024 for UPL due to oversupply and competition from Chinese players.
Chinese exports of agro-chemical products rose to a record in the second quarter and would remain elevated in third quarter, according to Jefferies.
($1 = 83.2190 Indian rupees)
(Reporting by Ashish Chandra in Bengaluru; Editing by Mrigank Dhaniwala)