India's Tata Consumer Products misses Q3 profit estimates on higher tea prices

Tata Consumer Products

30/01/2025 13:44

Jan 30 (Reuters) - India's Tata Consumer Products
 TACN.NS  reported a smaller-than-expected third-quarter profit
on Thursday, hurt by elevated domestic tea prices that squeezed
the company's margins.
    The Tata group-owned company posted a consolidated net
profit of 2.79 billion rupees ($32.2 million) for the
October-December quarter, which was flat year-on-year. Analysts,
on average, had expected a profit of 3.58 billion rupees, per
data compiled by LSEG.
    Tata Consumer, known for its 'Tetley' tea and its namesake
brand of salt, was hurt by rising costs of domestic tea, the
company said, as the commodity contributes nearly 60% to overall
revenue.
    Tea prices in India have been rising due to adverse weather
conditions, higher production costs and supply chain
disruptions, according to analysts.
        Prices of tea in the northern parts of India increased
21% in the third quarter, while those in the southern parts
jumped 38%, the company said, adding that this lifted raw
materials costs by 34%.
  
    Its Indian business, which sells packaged products including
pulses and spices and accounts for 56% of profit, reported a 43%
fall in profit during the quarter due to the surge in tea
prices.    
        As a result, Tata's margins on consolidated earnings
before interest, taxes, depreciation and amortisation (EBITDA)
contracted by 210 basis points year-on-year in the third
quarter.
  
    However, the company's international businesses, which
contributes nearly 30% to revenue, aided a 17% growth in overall
revenue from operations to 44.43 billion rupees, beating
analysts' estimate of 43.98 billion rupees.
    Revenue from the international business rose 8% and profit
from the segment grew 53% year-on-year.
     
    ($1 = 86.6020 Indian rupees)

 (Reporting by Ashna Teresa Britto; Editing by Sonia Cheema)
 ((mailto:AshnaTeresa.Britto@thomsonreuters.com;))