Asian Paints Q1 profit rises 23% on strong revenue, EBITDA

Asian Paints , one of the largest paint companies in India, reported slightly better-than-expected earnings on topline as well as bottomline fronts while operational performance was very strong led by increase in product prices despite higher raw material cost. Consolidated net profit grew 23.2 percent on yearly basis to Rs 338.7 crore on total income of Rs 3,362 crore (up 19.3 percent compared to corresponding quarter of last fiscal) in the quarter ended June 2014.


 According to CNBC-TV18 poll estimates, analysts had expected the company to report net profit of Rs 333 crore on revenue of Rs 3,330 crore for the quarter. "The decorative business registered double digit growth during the quarter with good growth across geographies. 


The automotive coatings JV (PPG-Asian Paints), saw good growth in the general industrial segment and refinish segments while the automotive segment demand was subdued," said KBS Anand, MD and CEO.

 Operating profit (earnings before interest, tax, depreciation and amortisation) surged 26 percent to Rs 557 crore from Rs 442 crore during the same period and margin expanded by 120 basis points to 16.9 percent in the quarter gone by despite higher raw material cost. Expectations for both were Rs 530 crore and 15.9 percent, respectively. During Q1, the company took two price hikes of around 1 percent in May and around 1.2 percent in June in the decorative segment.


 Cost of raw materials (like crude oil, monomers, solvents etc) shot up 17.6 percent year-on-year to Rs 1,768.75 crore in April-June quarter. Brent crude oil rose 7 percent to USD 110 a barrel during the quarter compared to same quarter last year. KBS Anand said performance of the international units were a mixed bag with units in Caribbean, UAE, Singapore and Bangladesh doing well, adding operations in Egypt were affected due to weak business sentiment in the country. Other income jumped 71.7 percent to Rs 47.31 crore from Rs 27.71 crore during the same period, which included dividend of Rs 25.75 crore from its wholly owned subsidiary, Asian Paints International, Mauritius. 


Asian Paints reported an exceptional loss of Rs 25.16 crore on account of payment towards voluntary retirement at its Bhandup plant in Mumbai. It has discontinued the manufacturing activities at this plant from May 5, 2014.