Shares of Adani Wilmar are expected to be closely watched as the company announced a 15 per cent year-on-year decline in sales attributed to a significant drop in edible oil prices, despite a 25 per cent increase in volumes for the quarter. The edible oil and industrial essentials segments experienced a 15 per cent decrease in revenues, according to the company.
Over the past year, edible oil prices have witnessed a decline of more than 50 per cent. During the June quarter, edible oil prices experienced a sequential decline ranging from 5 per cent to 20 per cent, followed by a recovery towards the end of the quarter. Adani Wilmar mentioned that its risk management framework has helped mitigate the impact of falling prices on gross profits to a significant extent. However, the presence of high-cost inventory in a declining price environment continued to exert pressure on profitability throughout the previous financial year, a trend that persisted in the June quarter.
The company highlighted that the base quarter (June quarter of the previous year) had faced demand disruption due to high edible oil prices caused by the Russia-Ukraine conflict. However, on a sequential basis, the volume growth was strong.
The decline in edible oil prices has stimulated consumer demand in India, which has remained robust over the last three quarters, according to Adani Wilmar.
The company also noted the adverse impact of unseasonal rains and hailstorms in key wheat-producing states, affecting crop quality. The impact on output quantity is yet to be determined by government agencies. Wheat prices increased during the quarter, leading the government to release wheat from its stock into the open market to stabilise prices. The ban on wheat exports remains in effect.
Adani Wilmar reported a revenue growth of over 30 per cent year-on-year, surpassing the Rs 1,000 crore mark for the Food & FMCG segment on a standalone basis. This marks the eighth consecutive quarter with over 20 per cent volume growth and over 30 per cent revenue growth for the Food & FMCG segment.
Strong demand was observed in both urban and rural areas. The oil and food products continued to experience rapid growth in alternate channels such as e-commerce, modern trade, and electronic business-to-business, with approximately 50 per cent year-on-year volume growth for the quarter. The company focused on expanding distribution in the General Trade channel for both oil and food products. The sale of branded products to hospitality, restaurants, and cafes (HoReCa) clients also displayed strong growth, with expanded distribution in more cities and the acquisition of new client accounts.
