Q3-2015: Titan q-o-q income, PAT and ad spends down

BENGALURU: Titan Company Limited  reported lower q-o-q Total Income from Operations (TIO) and Profit After Tax (PAT) in Q3-2015 as compared to the corresponding numbers reported in the immediate trailing quarter Q2-2015.

The company also spent 8.6 per cent less towards advertisement (ASP) in Q3-2015 at Rs 96.75 crore (3.3 per cent of TIO) as compared to the Rs 105.83 crore (2.9 per cent of TIO) in Q2-2015 and 18 per cent less than the Rs 118.04 crore (4.4 per cent of TIO) in the corresponding quarter of last year. (Refer to Fig A below).

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

Over a 12 quarter period starting Q4-2012 until the current quarter (Q3-2015), Titan’s ASP shows an upward linear trend in absolute rupees, but a downward linear trend in terms of percentage of TIO. Titan’s simple average ASP in terms percentage of TIO during these 12 quarters is 3.6 per cent. The company’s highest ASP during the 12 quarters under consideration has been in Q3-2014 at Rs 118.04 crore (4.4 per cent of TIO) in terms of absolute rupees. In terms of percentage of TIO, ASP was highest at 4.7 per cent of TIO (Rs 103.44 crore) in Q1-2013 during the same 12 quarter period.

Titan’s lowest ASP during the quarters under consideration was in Q4-2013, both in terms of absolute rupees and percentage of TIO at Rs 66.63 crore (2.5 per cent of TIO)

Income and PAT

Titan’s TIO in Q3-2015 at Rs 2922.51 crore was 18.7 per cent lower than the Rs 3593.07 crore in Q2-2015 and 9.2 per cent more than the Rs 2675.77 crore in the corresponding quarter of last year. TIO shows a linear increasing trend during the 12 quarter period under consideration.

Titan’s PAT in Q3-2015 at Rs 190.73 crore (7.1 per cent of TIO) was 20.5 per cent less than the Rs 239.98 crore in Q2-2015 and 15.2 per cent more than the Rs 165.57 crore in Q3-2014. PAT shows a slightly increasing trend in absolute rupees and an almost flat to a slightly downward trend in terms of per centage of TIO during the 12 quarter period in this report.

Businesses and Brands

Titan has three revenue segments – watches having the brands –Titan, Xylus, Nebula, Sonata and Fastrack and Zoop; Jewellery with Tanishq, Zoya, Gold Plus from Tata, Mia and Fq teen diamonds; and ‘Other’ such as eyewear under the Titan EYE+ brand, apparel and eyewear also under Fastrack brand and precision engineering among others.

Jewellery contributes about 80 per cent to Titan’s TIO. Last quarter (Q2-2015), its jewellery distribution brands Tanishq and Goldplus from Tata showed an upsurge in retail sales by as much as 75 per cent and 84 per cent respectively. In the current quarter, Goldplus from Tata grew by 30 per cent, however, Tanishq disappointed with a drop of 4 per cent in sales.  Though the jewellery segment reported a 11.2 per cent y-o-y growth to Rs 2347 crore (80.3 per cent of TIO) from Rs 2111 crore (78.9 per cent of TIO), q-o-q, the segment reported a slump of 19.9 per cent from Rs 2929 crore (81.5 per cent of TIO).

The Helios brand from Titan’s Watches business segment in terms of sales also disappointed with a drop of 3 per cent in sales in Q3-2015. ‘Watches’ is Titan’s second largest business segment in terms of sales and contributes about 15-17 per cent to Titan’s TIO. Watches segment reported a y-o-y growth of 0.4 per cent to Rs 453 crore (15. 5 per cent of TIO) in Q3-2015 from Rs 451 crore(16.9 per cent of TIO) in Q3-2014, and a drop of 14 per cent from the Rs 527 crore (14.7 per cent of TIO) in Q2-2015.

The ‘Others’ segment reported 2.9 per cent drop to Rs 134 crore (4.6 per cent of TIO) in Q3-2015 from Rs 138 crore (3.8 per cent of TIO) in Q2-2015 and a growth of 15.5 per cent from Rs 116 crore (4.3 per cent of TIO) in Q3-2014.

Company Speak

Titan managing director Bhaskar Bhat said, “Titan Company, with a large portfolio of strong brands, operating in multiple industries, grew by over 9 per cent in the third quarter. This period, which is a festival quarter, faced heightened activity from e-commerce players participating in this gifting season. Going forward the market sentiment is looking good, with the fiscal budget from the new government coming up, drop in inflation and positive global factors like slump in oil prices. The company is gearing up for the last quarter with the launch of new products and advertising campaigns that are lined up, including activation from some brands.”

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