Diageo India posts dismal Q1 financial results

Image credit: diageoindia.com

Net sales dip 54% due to COVID-19

Diageo India, a subsidiary of global leader Diageo plc has reported net sales drop of 54 percent due to COVID-19 induced lockdown which had effectively shut down its business for over a month. However, the net sales have declined 51 percent if the one-time sale of bulk Scotch last year is taken into account.

The company manufactures, sells and distributes alcoholic beverage premium brands such as Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, Royal Challenge, McDowell’s No.1, Smirnoff and Captain Morgan.

Gross margin was 41.7 percent, down 567bps on a reported basis, primarily driven by lower franchise income, COGS inflation, one-off obsolete inventory write-off during the quarter. Earnings before interest, taxes, depreciation, and amortization, EBITDA was negative at Rs (78) Crores and EBITDA margin was 7.5 percent, driven by contraction in gross margin, negative impact of operating leverage, and COVID-19 induced ageing related provisions. Profit after tax was Rs 215 crore (net loss), versus Rs 197 crore in the same period last year.

The company is headquartered in Bengaluru, with 3500 employees and 50 manufacturing facilities across India.

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