Asian Paints Q2FY25 Financial Results showed a significant dip in profits and revenue, largely due to weak consumer sentiment, adverse weather conditions, and higher input costs. The company, which is one of India’s largest paint manufacturers, reported a 42.4% year-on-year decline in consolidated net profit for the quarter ending September 2024.
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| Asian Paints Q2FY25 results show a 42.4% YoY drop in net profit, with a 5.3% revenue decline due to weak consumer demand and adverse weather conditions |
Key Highlights:
Net Profit Decline:
- Consolidated net profit dropped to Rs 694.64 crore from Rs 1,205.42 crore in Q2FY24.
- The profit was below market expectations, which had forecasted a profit of Rs 1,079 crore.
Revenue Decline:
- Consolidated sales declined by 5.3% to Rs 8,003 crore compared to Rs 8,451 crore in Q2FY24.
- The revenue was short of analyst estimates, which had expected Rs 8,581 crore.
EBITDA and Margins:
- EBITDA (earnings before interest, taxes, depreciation, and amortization) fell by 27.8% YoY to Rs 1,239.5 crore.
- EBITDA margin decreased to 15.5% from 20.3% in the same period last year.
Dividend Declaration:
- The company announced an interim dividend of Rs 4.25 per share for FY25. The record date for dividend entitlement is November 19, 2024, with the payment scheduled for on or after November 28, 2024.
Challenges Impacting Performance:
- Weak Consumer Demand: A sluggish consumer sentiment, especially in the domestic decorative coatings segment, led to a 0.5% volume decline.
- Adverse Weather Conditions: Prolonged rainfall and floods in several regions impacted the demand for paint products.
- Price Cuts and Increased Costs: Last year’s price reductions and rising input costs, along with higher selling expenses, further impacted the company's margins.
Outlook for the Future:
Despite the challenges, Asian Paints remains optimistic about a margin recovery in the upcoming quarters. The company is expecting relief from lower raw material prices and the impact of price hikes implemented in Q2FY25.
Additionally, the company saw growth in its industrial coatings business and a modest international growth (especially in markets like Ethiopia and Bangladesh).
Summary:
Asian Paints' Q2FY25 results reflect a tough quarter, impacted by soft demand, price cuts, and increased material costs. However, with a strategic focus on price adjustments, and anticipating lower material costs in the near future, Asian Paints is poised for a potential margin recovery.