Diageo brands boost United Spirits H1 results

Ahead of an impending decision on the future of its chairman, Diageo-controlled Indian drinks group United Spirits has reported an 8% net sales increase in its half-year financial results.

United Spirits Limited, maker of McDowell’s No.1 Indian whisky, has seen its sales increase in the first half of its financial year

In the six months to 30 September 2015, the group acheieved net sales of Rs.4,151 crore, boosted by the success of its prestige and above brands, which grew 16%.

Meanwhile, 10 months after minority shareholders voted in favour of USL’s distribution of Diageo-owned brands, the group revealed that direct sales of Diageo’s portfolio added Rs.183 crore to net sales.

Profit after tax was “positively impacted” by the “divestment” of United Breweries, also reducing net debt. In July this year, USL sold its entire share in United Breweries to Heineken International BV.

“Our F16 half year results are starting to show the dividends of our comprehensive strategic plan focused behind our power brands with a clear prioritised geographical participation strategy,” said Anand Kripalu, CEO of United Spirits.

“The divestment of the UBL shares during the quarter has generated Rs.870 Crore of free cash that has been used to retire debt and has reduced our net debt position to less than Rs.4,000 crore from over Rs.5,000 crore six months ago.”

Kripalu added that USL had experienced “encouraging results” from the re-launch of its Royal Challenge Indian whisky brand, and revealed that a re-launch of McDowell’s No.1 is currently underway.

“We have however faced challenges in the last three months including specific industry challenges in states such as Uttaranchal and Chhattisgarh plus a temporary pricing related challenge in Karnataka on our lead brand of Haywards,” he added.

“The highly regulated environment in respect of pricing remains a key challenge for the industry as a whole and needs to be remedied.”

Local reports recently claimed that USL shareholders are set to vote on the continuing role of its controversial chairman Vijay Mallya later this month.

In April this year, USL’s board of directors issued a vote of no confidence in Mallya and called on shareholders to oust the billionaire tycoon as the group’s chairman.