MAM

Britannia Industries Q1-2015 marketing spend down 6 per cent, PAT up 27 per cent y-o-y

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BENGALURU: Britannia Industries Limited (Britannia) spent 5.9 per cent less towards Advertisement and Sales Promotion (ASP) in Q1-2015 at Rs 138.43 crore (7.7 per cent of Net total Income from Operations or TIO) versus Rs 147.11 crore (9.5 per cent of TIO in the year ago quarter and 5.3 per cent less than the Rs 146.19 crore (8.1 per  cent of TIO) in the immediate trailing quarter.

As a matter of fact, the company?s ASP in terms of percentage of TIO at 7.7 per cent was the lowest spend by the company over a 9 quarter period staring Q1-2013 till the current quarter Q1-2015. In terms of rupee value, Britannia?s ASP in Q1-2013 was the lowest over the nine quarter?s under consideration at Rs 112.96 crore, but was 8.3 per cent of TIO in that quarter. The company?s highest spend in terms of percentage of TIO was in Q1-2014 at 9.5 per cent (Rs 147.11 crore). The company?s highest spend in absolute rupees was in Q3-2014 at Rs 155.28 crore (8.7 per cent of TIO) during the nine quarters under consideration in this report.

Note: 100,00,000 = 100 lakh = 10 million = 1 crore

Britannia?s TIO in Q1-2015 was up 15.2 per cent at Rs 1786.99 crore versus Rs 1551.51 crore in Q1-2014 and 1.4 per cent lower than the Rs 181.44 crore in Q4-2014.

Overall, across the nine quarters? though the ASP spend in absolute rupee shows an upward linear trend. However, in terms of percentage of TIO, the ASP linear trend shows a decline. Britannia?s TIO shows an increasing linear trend. Please refer to Fig 1 below.

Britannia?s PAT in Q1-2015 at Rs 113.66 crore was the highest in terms of absolute rupees as well as percentage of TIO at 6.4 per cent. In the year ago quarter, (Q1-2014) PAT at Rs 89.49 crore (5.8 per cent of TIO) was 27 per cent lower than the current quarter PAT (Q1-2015).  The current quarter PAT was also 5.6 per cent higher than the Rs 107.66 crore (5.9 per cent of TIO) in Q4-2014. Overall, Britannia?s PAT seems to be moving upwards both in terms of absolute rupees and percentage of TIO (Linear trends not shown in Fig 2 below).

Overall, the FMCG, Food and Biscuit industries have shown declining growth over 18 months starting January 2013 (Q4-2013) from about 15-16 per cent for each industry to about 6 to 8 per cent in June 2014 (Q1-2015) says the company in an analyst meet/investor?s presentation. The company?s simple average TIO growth across the nine quarters under consideration is 3.6 per cent, and across the six quarters starting Q4-2013, it is 1.8 per cent, indicating a lower than industry average growth, hence overall reduction in share in a market that is growing.  

Please refer to figure 3 below. Q1 of three years (2013, 2014 and 2015) have shown low growth or de-growth in terms of q-o-q growth of TIO. Generally Q2 over the years has shown higher growth, maybe, if the trend continues this year, the company may show double digit TIO growth in the coming quarter, and, with the upward trend in PAT both in terms of absolute rupees as well as in terms of percentage of TIO, PAT in Q2-2015 could be a new record?

Click here to read the Consolidated paper.

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