Agrochemicals company UPL announced Q1FY24 results:
- Revenue of Rs 8,963 crore in Q1FY24 compared to Rs 10,821 in Q1FY23, down 17% YoY
- EBITDA of Rs 1,593 crore in Q1FY24 compared to Rs 2,342 crore in Q1FY23, down 32% YoY
- EBITDA Margin (%) of 17.8% in Q1FY24 compared to Rs 21.6% in Q1FY23, down 387 bps YoY
- Net Profit of Rs 166 crore in Q1FY24 compared to Rs 877 crore in Q1FY23, down 81% YoY
- Revenue and EBITDA for Q1 were impacted by the industry-wide slowdown.
- Differentiated and Sustainable portfolio delivered resilient performance growing by 7% YoY - revenue share rose significantly to 37% (from 27% in Q1FY23) supporting contribution margins.
- Seeds business delivered robust performance as revenue grew by 26% YoY and EBITDA increased by 54% YoY.
- Net Debt stood lower by USD 160 million vs USD 3,193 million as of 30 June 2023 despite lower factoring (USD 890 million on 30 June 2023 vs 1,140 million on 30 June 2022). Adjusted for the lower factoring quantum, net debt would have stood at USD 2,943 million (lower by USD 410 million YoY).
Commenting on the performance, Mike Frank, CEO – UPL Corporation, said, “The global agrochemical industry has been going through a challenging phase over the last two quarters as distributors prioritized destocking and focused on tactical purchases amid high channel inventories. Additionally, the market is witnessing pricing pressure given the high base of the previous year and the aggressive price competition we have seen from the Chinese post-patent exporters.
Given this backdrop, our revenue and profitability were also impacted by these headwinds in line with the rest of the industry. Having said that our differentiated and sustainable portfolio performed resiliently ( 7% YoY); with revenue share increasing significantly to 37% versus 27% last year. Favorable portfolio and regional mix coupled with better margins at Advanta helped improve contribution margins by ~198 bps YoY in Q1.
One of our key focus areas has been to improve cash flows and strengthen our balance sheet. In line with this, we have reduced our net debt by ~USD 160 million versus June 2022 despite much lower factoring (down by ~USD 250 million YoY).
Further, we are undertaking a cost reduction initiative of USD 100 million over the next 24 months; 50% of which we expect to be realized in FY24. Going forward, while we anticipate demand to remain subdued in Q2FY24 as well, our performance should be sequentially better. We are optimistic about demand recovery in H2FY24 as the channel inventory approaches a new normalized level. Overall, led by improved demand and cost optimization efforts, we expect our Revenue and EBITDA growth to turn positive in H2FY24, with full-year Revenue growth to now be in the range of 1-5% with EBITDA growth at 3-7%.”