Mumbai: In a season marked by dampened demand, economic pressures, and persistent monsoons, Asian Paints saw a dip in performance during Q2 of FY25. The company’s consolidated net sales for the quarter reached Rs 8,003 crores, down 5.3 per cent from Rs 8,451.9 crores in the previous year. The period was particularly challenging for the domestic decorative business, impacted by low consumer sentiment, extensive rains, and floods in key regions, marking a volume decline of 0.5 per cent and a revenue decrease of 6.7 per cent.
Asian Paints’ standalone financials also reflect these struggles. The standalone net sales fell by 6.5 per cent, reaching Rs 6,840.6 crores compared to Rs 7,315.7 crores in Q2 FY24. The company’s efforts to adjust its pricing, with reductions last year and selective increases this quarter, had limited impact on countering the cost pressures from raw material prices and sales expenses, hitting the operating margins substantially. For Q2, the standalone PBDIT margin decreased to 16.4 per cent, a decline of 530 basis points from last year.
The strategic decisions on pricing have had a notable impact on Asian Paints’ bottom line. Although the firm implemented price increases during Q2, the benefits are expected to manifest only in the second half of the year, while ongoing cost pressures from raw materials and elevated sales expenses strained Q2 margins. The consolidated PBDIT margin narrowed to 15.5 per cent, down 480 basis points from last year’s 20.3 per cent. Net profit after tax, excluding exceptional items, saw a sharp 42.4 per cent reduction, sliding to Rs 694.6 crores.
Exceptional items further dampened the quarter’s results, including a Rs 180.1 crore impairment loss, which affected goodwill on acquisitions like White Teak and Weatherseal in addition to foreign exchange losses associated with subsidiary operations in Ethiopia.
Despite the challenging quarter, Asian Paints’ Industrial Business displayed resilience. General Industrial, Protective Coatings, and Refinish segments reported decent growth, providing some support against the broader revenue challenges. In international markets, however, the effects of currency devaluation in Ethiopia, Egypt, and Bangladesh weighed heavily, contributing to a revenue decline of 0.7 per cent. On a constant currency basis, though, the segment achieved an 8.7 per cent growth rate, underscoring the strength of Asian Paints’ offerings despite global economic pressures.
Asian Paints’ Home Décor category experienced growth through its Beautiful Homes network, albeit below expectations. In the Bath Fittings and Kitchen segments, sales growth was steady, with bath fittings recording a 2.1 per cent increase to Rs 83.1 crores and the kitchen business up by 8.8 per cent to Rs 105.3 crores. Yet, profit margins in these segments were under pressure, as the Kitchen business posted a slight loss in Q2 despite increased sales.
Meanwhile, White Teak and Weatherseal, recent acquisitions within the decor portfolio, continued to benefit from synergies with Asian Paints’ distribution network. White Teak’s Q2 sales rose by 19.2 per cent to Rs 31.1 crores, while Weatherseal saw a 4.8 per cent increase to Rs 13.2 crores.
As Asian Paints enters the latter half of FY25, it faces ongoing pressures in both domestic and international markets. With anticipated easing of material costs and the impact of recent price increases expected to flow through, the company foresees margin improvement in the coming quarters.
Key Financial Highlights:
• Q2 FY25 Consolidated Net Sales: Rs 8,003 crores, down 5.3 per cent YoY
• Standalone Net Sales: Rs 6,841 crores, down 6.5 per cent YoY
• Consolidated PBDIT Margin: 15.5 per cent, down 480 bps from last year
• Standalone PBDIT Margin: 16.4 per cent, down 530 bps from last year
• Net Profit (post-minority interest): Rs 694.6 crores, down 42.4 per cent YoY
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