Britannia Industries to continue raising prices in Q2 amid high inflation

Britannia Industries will continue to take price increases in the ongoing quarter (July-September) of 2022-23 (FY23) as price increases taken in the previous quarters weren’t enough to cover inflation. 

Between the April-June and July-September quarters of FY23, the biscuit major will take a price hike between 6 per cent and 7 per cent, Varun Berry, managing director, Britannia Industries, told analysts after the company’s earnings call.

At its presentation, the company said a substantial portion of the price increase will happen in the second quarter of FY23.

The company has also accelerated its cost-efficiency programme across verticals.

“There has been a drop as far as volumes are concerned. Our volumes are in single digits. But the number of packets we sell is flat. Hopefully, this will start to rise,” said Berry. 

He also expected the earnings before interest, tax, depreciation, and amortisation margins to normalise soon.

“I think normalisation is around the corner,” he said. However, during the quarter, the company witnessed a drop in volume.

At its presentation, the company said: “In such unprecedented circumstances, we are being vigilant and taking steps through a mix of pricing and cost optimisation to revive profitability.”

In the April-June quarter, Britannia saw its revenue increase 9 per cent to Rs 3,351.9 crore, compared with last year. Its net profit stood at Rs 389.6 crore — down 13.4 per cent. 

During the quarter, the company’s profit before interest, depreciation, and tax was down 12.8 per cent to Rs 531.2 crore. 

The company said inflation has impacted its margins in the quarter. 

“We have been delivering consistent top line growth in this challenging economic environment, reflecting our team’s execution strength and go-to-market strategy evident in our consistent market-share gain over the past 36 quarters,” Berry said in its earnings release.

He also added, “We continue to expand our market leadership through reach and diligent market practices. Our rural footprint witnessed further additions and we now reach 27,000 rural preferred dealers, which also reflects in the rural market-share gain being better than urban.”

In rural markets, the maker of Good Day cookies is witnessing growth at 1.5x its all-India growth.

During the quarter, the company saw double-digit volume and value growth in cakes. It has also recently launched a cupcake offering at a never-before Rs 5 price point.

The company is also seeing double-digit volume and value growth in breads, said Berry. During the quarter, the company witnessed inflation in key commodities relevant to bakery.

Wheat flour prices have moved up 20 per cent quarter-on-quarter and industrial fuel was up 15 per cent, while palm oil was also up 5 per cent sequentially, the company said in its presentation. 

E-commerce is its fastest-growing channel. It grew 8x in the quarter.