Edible oil hits Adani Wilmar’s biz in Q2; Foods biz grows 26%

Steep fall in prices of edible oils over the last one year impacted industry leader Adani Wilmar Ltd.’s (AWL) business in July-September, FY2024 quarter (Q2, FY224). The Ahmedabad-based company gets the majority of its revenue from the edible oil segment that it dominates in India with flagship brand Fortune.

During the quarter, its sales of its edible oils grew 4 per cent by volume but revenue fell by 19 per cent year-on-year to Rs 9,038 crore from Rs 11,221 crore in the corresponding quarter previous year. Steady fall in prices of edible oil also resulted in a major shrink in its contribution towards AWL’s top-line over the past two years. While the segment used to contribute over 85 per cent towards its revenue in end-2021, the share has come down to 74 per cent in the end of September 2023.

According to the company, growth in edible oils segment was primarily led by sunflower oil and mustard oil, which have been growing faster than the industry due to strong brand equity. During the quarter, the refined oil in consumer packs market share of AWL in edible oils reached 19.6 per cent in September 2023 on moving annual total (MAT) basis. This led to a growth of 10 basis points compared to the same period last year.

“We continued the growth momentum across all the business categories, amidst the challenging environment in the edible oils segment. The Company gained market share across most of the edible oil & food categories, given the immense focus on expanding our direct reach and rural town coverage. We see a huge potential for packaged oils & foods in the rural markets. While the profitability in edible oils were impacted consecutively for the second quarter, we believe that the abnormality will soon reverse,” said Angshu Mallick, Managing Director & CEO of AWL.

Meanwhile, its Food & FMCG business recorded major surge in sales. Sales for the segment grew 26 per cent in value terms and 19 per cent by volume - to touch Rs 1,283 crore. This resulted in its share growing to 10 per cent of AWL’s overall sales for the first time. According to Mallick, revenues from the branded products under the Food & FMCG segment have been growing consistently at over 40 per cent y-o-y in the past 8 quarters. The company is simultaneously building its branded exports business, where it has witnessed potential to serve the Indian diaspora abroad, he said.

Massive fall in edible oil sales also impacted AWL’s overall profitability. Its earnings before interest, tax, depreciation and amortisation (EBITDA) declined 43 per cent in Q2, FY24 to Rs 144 crore from Rs 254 crore in the year ago period. While its bottom-line went into red - reporting Rs 131 crore net loss for the quarter - down from Rs 49 crore net profit.

Also Read: Sun Pharma Q2 results: Profit rises 5% to Rs 2,376 crore YoY; revenue up 11%