Eveready Industries posts 3-fold jump in Q4 profit

Batteries maker Eveready Industries India shares rallied today on reporting electrifying earnings performance during the fiscal fourth quarter.
On Wednesday, after the market hour, the company reported over three-fold jump in its net profit at Rs 179.57 crore for FY2019-20, compared to Rs 47.26 crore in the last fiscal.
Net profit surged multi fold to Rs 63.73 crore as against Rs 4.04 crore in Q4 FY19 in the January-March quarter of FY20.

The profitability was aided by rise in gross margin in the core segments of batteries and flashlights and improvement in operating margin due to additional cost savings measures. The discontinuance of the packaged tea business further helped the company in improving margins and releasing working capital.
The operating income of the battery maker, however, fell 17% to Rs 1,210.93 crore in FY20 from Rs 1,457.73 crore in the full financial year 2018-19. For January-March quarter of FY20, operating income declined 28% on year to Rs 224.20 crore.

The turnover for the quarter and the year was lower than that in the previous year as the segments of lighting and appliances were adversely impacted. Furthermore, discontinuance of the packet tea segment decreased turnover by Rs 40.4 crore during the year (Rs 18.7 crore during the quarter).

All business segments of the company, including batteries and flashlights, got adversely impacted as optimal sales could not be achieved in March 2020 due to the countrywide lockdown imposed to contain the COVID crisis. Due to this disruption alone, the company’s turnover during the month was lower by around Rs 60 crore.
EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) fell 1% on year to Rs 121.13 crore in FY20, while it jumped 139% on year to Rs 28.67 crore in Q4 FY20. The EBITDA margin stood at 10% in FY20 versus 8.4% in FY19. For Q4 FY20, margin rose to 12.8% to 3.8% in Q4 FY19.

Going forward, the situation in the battery segment is expected to improve due to sharp decrease in dumped imports from China and the disruptions caused to the unorganised market due to non-availability of supplies.
The company has not recommended dividend for the financial year ended March 31, 2020.
Large part PAT has come fr other inc & exceptional one time inc Rs 151 crs & Rs 46 crs other income. Small positive has been the sharp spike in ebidta % for Batterry at 21% while shareholder returns have been poor in the last 5 years.

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