Asian Paints, the country’s largest paints maker, posted a 45% year-on-year drop in profit in the fourth quarter, while margins remained under stress due to inflationary pressures and higher ad spends.
The Mumbai-based company’s consolidated net profit came in at Rs 692.13 crore in the quarter ended March, missing Street estimates of Rs 1,075 crore. The company also reported a one-time cost of Rs 183 crore.
The exceptional item of Rs 183 crore includes an impairment loss of Rs 77.8 crore on White Teak’s goodwill and intangible assets, and Rs 21.5 crore on Causeway Paints’ goodwill, both acquisitions by the company. Additionally, there was a loss of Rs 83.7 crore from the disposal of assets in Indonesia, the company said.
Net sales declined 4.3% y-o-y to Rs 8,359 crore in Q4, coming in marginally below Street estimates of Rs 8,612 crore.
Earnings before interest tax depreciation and amortisation (Ebitda) was down 15% to Rs 1,436.20 crore in the March quarter, below estimates of Rs 1,565 crore. Margin stood at 17.2% versus 19.4% reported last year.
The company’s decorative paints business in India, where it is the leader with over 50% market share, saw a volume growth of 1.8% in Q4, but faced a revenue decline of 5.2% versus last year. Muted demand conditions, downtrading and increased competitive intensity impacted revenue, the company said.
“The weak demand conditions prevalent for the past few quarters continued to affect the paint industry even in the last quarter of the financial year. The demand for decorative coatings was only marginally better than in the third quarter,” MD & CEO Amit Syngle said.
Despite these challenges, the industrial business showed resilience, growing by 6.1% during the quarter. This was driven by robust performance in the general industrial and automotive segments.
The company’s home decor categories saw a muted performance in Q4 with pressure on household disposable incomes, it said. International business registered a value decline of 1.5% with headwinds from challenging macro-economic conditions in Africa.