Asian Paints on July 24 reported a massive 66.7 percent year-on-year decline in net profit at Rs 218.45 crore for the quarter ended June 2020 due to lockdown, but overall earnings beat analyst estimates on business improvement in June.
"Profitability across businesses was well supported by the softer raw material prices and the various cost control measures being actively pursued by the management," Amit Syngle, Managing Director & CEO said.
Revenue from operations in Q1FY21 declined 42.7 percent to Rs 2,922.6 crore compared to year-ago period.
"After a complete washout in April 2020 due to extended lockdown, the Decorative business segment witnessed improving business conditions over the next two months. Thus, while the quarter ended in a negative territory, the business registered a healthy double digit volume growth in the month of June 2020 to end the quarter on a promising note," Amit Syngle said.
The other business segments in India including the two industrial coatings business and both the segments in the Home Improvement category also witnessed improving trends in June 2020, albeit at a lower pace, he added.
He said the international business portfolio did well supported by favourable operating conditions in markets in Middle East and Africa though key markets of Nepal and Bangladesh in Asia were impacted by the pandemic lockdowns.
Profit was estimated at Rs 27 crore on revenue of Rs 2,050 crore for the quarter, as per the average of estimates of analysts polled by CNBC-TV18.
Paints revenue during the quarter declined 42.6 percent to Rs 2,871 crore compared to year-ago period and the segment's EBIT was down 65 percent to Rs 371.6 crore and margin contracted 840 bps to 12.9 percent YoY.
On the operating front, its earnings before interest, tax, depreciation and amortisation (EBITDA) fell 58.2 percent year-on-year to Rs 484.2 crore and margin contracted 610 bps to 16.6 percent in June quarter 2020, which both were far above CNBC-TV18 poll estimates of Rs 191 crore and 9.3 percent respectively.
Overall earnings were also largely supported by lower other expenses (that declined 36.7 percent YoY) and tax cost (down 75.5 percent YoY) for the quarter.
The stock closed at Rs 1,710.95, down 0.95 percent on the BSE.
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