Exceptional gains boost Tata Global Q1 profit

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Exceptional gains boost Tata Global Q1 profit

Tata Global Beverages (TGB) first quarter consolidated net profit surged over three-fold to Rs 161 crore as one time gains helped offset commodity cost pressure. Total operating income for April-June was up 6% to Rs 1,467 crore.

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Tata Global Beverages (TGB) first quarter consolidated net profit surged over three-fold to Rs 161 crore as one time gains helped offset commodity cost pressure. Total operating income for April-June was up 6% to Rs 1,467 crore.

TGB's profit for the three months period was boosted by one time gains of Rs 89 crore as the company sold some shares held largely by Tata group companies, L K Krishnakumar, CFO of the company told reporters speaking at a conference.

TGB's profit before exceptional items however fell nearly 14% to Rs 99 crore Year-on-Year on the back of rising raw tea and coffee prices. During the quarter, total expenses was at Rs 1,373 crore compared with Rs 1,265 crore a year back.

While higher prices of raw tea hit the company's India operations, the rise in price of arabica variety of coffee impacted its U.S operations under the brand of 8'o clock coffee.

However, the company has transmitted the higher cost to its customers by hiking prices of its top tata tea domestic brands like premium, gold and agni in June-July. The price hike should boost its margins in the coming quarters.

"Both raw tea as well as coffee prices have seen some correction in August. This should also aid earnings growth in FY12. While US operations are on a road to recovery, the pressure is likely to remain at least in the June-September quarter," said Percy Siganporia, MD, TGB.

TGB has embarked on a two-pronged strategy to fuel business growth: to control cost and restructure various businesses. It has now integrated all the companies, it owns globally, into three regions respectively south Asia, EMEA (Europe and Middle East) and CAA (Canada, America, and Australia).

Moreover, it has discontinued its brand 'T!on', a health beverage brand launched in 2010 in Tamil Nadu.
"The company will in turn focus on launching health drink under its joint venture NourishCo," Siganporia said without giving any product details.

NourishCo is a JV between TGB and PepsiCo.

TGB shares were at Rs 105.60, up nearly 1% at the close of Wednesday's trade.