Asian Paints reported a 24.5% decline in net profit for Q1FY25, attributing the drop to weak demand resulting from general elections and severe heat waves. The country's largest paint manufacturer saw its profits fall to Rs 11.7 billion, with the decorative paints business in India experiencing a volume growth of 7%.
During the quarter, Asian Paints' net sales amounted to Rs 89.7 billion, a decrease of 2.3%. The company noted that the quarter's revenue growth was adversely impacted by price cuts implemented in the previous quarter and changes in product mix.
Profit before interest, depreciation, and tax dropped 19.7% to Rs 18.87 billion for the quarter ending in June.
Asian Paints also reported that regions such as Ethiopia and Sri Lanka experienced growth due to gradual economic recovery, while macroeconomic issues in key markets like Nepal, Bangladesh, and Egypt affected the overall performance of the international business.
"Demand conditions for the paint industry were tough, impacted by the severe heatwave and general elections in the quarter. We delivered a good volume growth of 7% in the decorative segment aided by some movement in rural markets; however, value declined by 3% due to the earlier price decrease and shift in product mix," said Amit Syngle, Managing Director and CEO, Asian Paints, in a release.
"Unexpected material price inflation coupled with supply chain challenges impacted the profitability of the decorative business for the quarter," he added.
The industrial business performed relatively better, growing by 5.8% in value, supported by strong growth in the Auto OEM and powder coatings segments. The economy segment also saw significant uptake, driven by the launch of the revolutionary latex paint NeoBharat, part of Asian Paints' strategy to penetrate the 'bottom of the pyramid' market segment.
Syngle highlighted a progressive quarter for the home d'cor segment, with growth across all categories and strong performance in its Beautiful Home Stores.
Looking ahead, Syngle expressed optimism: "In the near term, we expect demand conditions to improve with better rural sentiment and the monsoons picking up gradually. We remain focused on driving growth through enhanced brand saliency, innovation, and customer centricity."
(Source: BS)
