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United Spirits Net Profit Falls 14.6%

United Spirits Q4 gets rattled by rising costs

The good times have slowed down. United Spirits, led by the flamboyant figure of Vijay Mallya, who has interests in aviation, Formula 1 racing, cricket and, of course, spirits has blamed the current global economic slowdown and rising expenses for a huge fall in the quarterly numbers of the company--sales have gone up, but net profit has fallen.

United Spirits (the company is in the business of manufacture, purchase and sale of alcohol and beverages), which is one of the largest spirits companies in the world, has announced its unaudited fourth quarter results for financial the year 2009, revealing that net sales have gone up by 19.6 per cent from Rs 758.98 crore to Rs 907.8 crore, but net profit has come down by 14.6 per cent to Rs 55.62 crore in Q4 FY09 as against Rs 65.11 crore in Q4 FY08.
Among a host of influences driving the company down were, foremost, its operating expenses increasing 21 per cent, from Rs 637.46 crore to Rs 772.41 crore; Raw raterial costs went up by 88 per cent to Rs 229.2 crore from Rs 121.95 crore; interest costs shot up to Rs 56.5 crore as against Rs 32.87 crore, a rise of 71 per cent. And to make matters worse, the company reduced its spending on advertising--advertisement costs came down 8.3 per cent from Rs 86.8 crore to Rs 79.57 crore.
The net effect on the company's scrip was to dampen it in a major manner. The stock price dropped 26.7 per cent in Q4 FY09 from Rs 886 as on December 31, 2008 to Rs 649 as on March 31, 2009.

The scrip opened the day at Rs 739.50, but after the quarterly results were declared the stock slipped to end the day at Rs 710.40.