Fevicol maker Pidilite posts surprise fall in third-quarter profit

Pidilite Industries

24/01/2023 13:00

BENGALURU, Jan 24 (Reuters) - India's Pidilite
Industries, parent of adhesive brand Fevicol, on Tuesday
reported a surprise 15% fall in quarterly profit, hit by higher
input costs and weak demand. 
    Rising inflation has forced cash-strapped consumers in rural
markets and smaller towns and cities to tighten budgets as they
struggled to recover from the economic impact of COVID-19. 
    The Mumbai-based company said consolidated net profit fell
to 3.04 billion rupees ($37.26 million) in the three months
ended Dec. 31. Analysts on average expected the company to
report a profit of 3.82 billion rupees, according to Refinitiv
IBES data.
    The construction chemicals maker's consolidated revenue from
operations rose 5.2% to 29.98 billion rupees, its slowest growth
in nine quarters. Revenue in the year-ago quarter was inflated
by price hikes, it added.
    Pidilite, known for its synthetic resin adhesive Fevicol and
waterproofing product Dr. Fixit, reported a 4.7% rise in cost of
raw materials. 
    Meanwhile, demand in rural and semi-urban areas remain under
strain, Managing Director Bharat Puri said in a statement.
    Revenue from consumer and bazaar segment, which sells 
adhesives, craft materials and construction and paint chemicals
to retail users, grew 6.9%. This segment accounts for 80% of the
company's revenue. 
    The international units reported moderate sales growth,
while earnings before interest, taxes, depreciation, and
amortisation remained under pressure due to higher input costs
and the impact of currency depreciation, the company said.  
   "While input prices have moderated, this is still to reflect
in our gross margins as we were consuming high-priced inventory
this quarter," Puri said.    
   Shares closed 1.13% lower at 2382.35 rupees, ahead of the
earnings report. 
    ($1 = 81.5780 Indian rupees)
 (Reporting by Anuran Sadhu in Bengaluru; Editing by Dhanya Ann
Thoppil)
 ((Anuran.Sadhu@thomsonreuters.com; +91 8697274436;))