Emami Q4 results: Reports standalone net loss at Rs 37 crore

Kolkata: Emami on Friday reported standalone net loss for the fourth quarter ending March 31, 2020, at Rs 37.02 crore as compared to a net profit of Rs 48.53 crore in the same period last year. The makers of Zandu balm and Navratna hair oil standalone revenue from operation too declined by 20.8% at Rs 460.45 crore (Rs 581.58 crore) in the period under review.

The company attributed the performance to the existing business environment that was already facing challenges from weak consumption trends and liquidity concerns, which got severely impacted by Covid-19 pandemic. Emami said the lockdown led to a sharp decline in consumption due to rising unemployment and a significant drop in demand from low-income groups.

The pandemic also led the consumer shift towards more essential items like food, groceries and hygiene products thereby affecting the sale of the company’s niche and discretionary line of products, Emami said.

For the financial year 2019-20, Emami’s standalone net profit plunged by 5.3% to Rs 289.12 crore (Rs 305.25 crore) while revenue from operation declined by 3.9% to Rs 2389.92 crore from Rs 2488.7 crore reported in the FY19.

Emami’s share price, which was up on Friday morning, plunged immediately after the results were announced.

At a consolidated level, Emami's FY 20 revenue declined by 1.4% at Rs 2654.88 crore due to 16.8% decline in sales at Rs 532.68 crore during the fourth quarter. The company's net profit in the fourth quarter declined by 59.4% at Rs 22.75 crore (Rs 56.09 crore). This, however, did not have much impact on full year net profit which remained flat at Rs 302 crore.

Emami director Mohan Goenka said FY20 has been one of the most challenging years for the company. “The unprecedented Covid-19 pandemic brought about an environment where lives were at stake, which led to the already existing soft consumption trends to almost nil,” he said.

“Despite the Covid-led slowdown, strict cost control measures were able to improve our gross margins and cash profits as well as increase the market shares of our key brands. We will continue to innovate both in our existing and new brands to introduce products relevant to the current consumer demand as well as focus on cost management and cash conservation to navigate this unprecedented challenging time,” said Goenka.

Emami said despite the Covid impact, its key brands increased their market shares -- Kesh King grew its volume market share by 140 basis points at 26.6%, balms grew by 130 bps at 54.9%, BoroPlus grew by 30bps at 74.1% and Navratna grew by 10 bps at 66.4%.

Harsha V Agarwal, director at Emami said the current consumer trends which we believe is here to stay indicate that categories like personal hygiene and natural health care products for boosting immunity and other wellness products are very clear preferences.

“While we have already forayed into hand sanitizer, soaps and hand washes under the Boroplus brand and few other products in health care under Zandu, we are aggressively pushing to launch more products in both personal hygiene and healthcare categories in the next one to two months. This apart, as the current situation is gradually improving to reach normalcy, we feel that the demand for discretionary products could quickly come back to normal,” said Agarwal.