United Spirits net sales slip 45% in Q3

United Spirits’ standalone net profit for its third financial quarter ending 31 December 2015 was 45% lower compared to the same three-month period the previous year.

India’s largest drinks group reported standalone net profit of Rs 40.95 crore for the fiscal third quarter ending 31 December 2015, but registered a net profit of Rs 78.81 crore for the same period in 2014.

However, the company’s overall profit increased 22% during the quarter, meaning net sales have grown 13% in total over the nine months of the firm’s financial year.

“Robust performance in the quarter and we continue to build confidence in our strategy behind our power brands and our prioritised geographical participation strategy,” commented Anand Kripalu, CEO, commenting on the nine months ending 31 December.

Direct sales of the Diageo brand portfolio contributed Rs 256 crore of net sales during Q3.

“Our focus on reducing debt continues with a 27% reduction in our debt in the nine month period (circa Rs 1,400 crore), driven by our non-core asset divestment strategy and the continued positive cash flow from operations,” added Kripalu.

USL’s underlying operations generated cash of Rs 405 crore, net of working capital movement of Rs 400 crore, which includes incremental working capital associated with the Diageo brands’ integration into the company’s portfolio.

“Our capex investments are focused on upgrading our strategically important manufacturing units,” said Kripalu. “Focus on rebasing the balance sheet via the divestment of surplus/non-core assets together with renegotiation of borrowings terms will continue to pare back the total interest cost for the company.

“The above results and the actions that are driving this growth give me the confidence that USL can deliver strong and sustained performance in the coming years.”

In Diageo’s interim results announced today, the company reported net sales plummet £400 million.