Asian Paints' net profit drops 29% on high raw material prices

Asian Paints Ltd on Thursday reported a 29 per cent decline in consolidated net profit to ₹605.17 crore in the second quarter ended September 30, on account of higher expenses, especially input costs. The company had posted a consolidated net profit of ₹851.9 crore in the corresponding period of last fiscal, Asian Paints Ltd said in a regulatory filing.

Its consolidated revenue from operations in the second quarter stood at ₹7,096.01 crore, against ₹5,350.23 crore a year ago.

The company said its total expenses in the second quarter stood at ₹6,418.17 crore as compared with ₹4,299.12 crore in the same period last fiscal. Of this, cost of materials consumed was at ₹4,570.53 crore as compared to ₹2,646.49 crore in the year-ago quarter, the company said.

Asian Paints Ltd Managing Director and CEO Amit Syngle said, "Steep inflation seen in raw material prices, since the beginning of this calendar year, has been phenomenal and has impacted gross margins across all businesses in the quarter."

The company has taken a series of price increases and would look at further price increase to mitigate the impact of this persistently high inflation, he said adding that the company is confident that it should be able to turn this around strongly in the coming quarter.

Syngle said the domestic decorative business continued to "move ahead on its high growth trajectory with an unprecedented 34 per cent volume growth in the quarter and a strong compounded growth rates over the last two years".

The industrial coatings business also registered strong double-digit revenue growth, led by robust demand for protective coatings and uptick in the automotive sector. The home improvement business continued to scale up in a significant manner, registering its highest quarterly revenues, aided by strong alignment with the projects business, he added.

"Performance in the international business was a mixed bag with good growth in the South Asian markets, while markets in the Middle East and Africa were sluggish with challenges around COVID-19 and forex (foreign exchange) availability," Syngle said.

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