Berger Paints Q3 Profit Declines 8% Amid Weather and Seasonal Challenges
Berger Paints India Ltd, the country's second-largest paint manufacturer, reported a quarterly profit drop that fell short of analyst expectations, primarily attributed to an unusually extended monsoon in October and a condensed festive season affecting its December-quarter performance.
Financial Performance and Analyst Estimates
According to the company's exchange filings, the Kolkata-based firm's net profit attributable to owners decreased by approximately 8% quarter-on-quarter to ₹271.16 crore for the third quarter. This figure missed the Bloomberg poll estimate of ₹285.83 crore from 14 analysts, highlighting the impact of external factors on earnings.
In a statement, Abhijit Roy, Managing Director and CEO of Berger Paints, explained, "The extended monsoons into October and the shortened festive season led to a negative October." However, he noted that demand progressively improved throughout the remainder of the quarter, contributing to solid volume growth.
Operational Metrics and Revenue Trends
The paintmaker's Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) saw a marginal year-on-year decline of 0.16%, settling at ₹470.97 crore. Meanwhile, consolidated revenue experienced a slight increase of 0.29% on-year, reaching ₹2,983.97 crore.
For the December quarter, Berger Paints reported standalone volume growth of 8.5% and value growth of 0.4%. This performance was driven by a higher proportion of economy emulsions, textures, and tile adhesives, alongside price adjustments implemented in the economy emulsion segment for the 2024-25 period, as detailed in the investor presentation.
Demand Recovery and Future Outlook
Roy expressed optimism about the future, stating, "The gradual improvement in domestic demand indicators across segments and the sequential monthly uptick in demand are positive indicators going forward. Results in the months ahead are expected to reflect these improvements." This suggests that the company anticipates a rebound in performance as market conditions stabilize.
Exceptional Charges and Labour Code Impact
During the quarter, Berger Paints recognized a one-time exceptional charge of ₹53.31 crore. This charge arose from increased employee obligations following the implementation of new labour codes, adding an extra layer to the financial results for the period.
Overall, while weather disruptions and seasonal timing posed challenges, Berger Paints demonstrated resilience with volume growth and a positive demand trajectory, setting the stage for potential recovery in subsequent quarters.
