UPL Q2 Results: Net losses widen to ₹443 cr on pricing impact

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Agrochemical major UPL Group saw its losses widen for the September quarter despite an increase in volumes offset by pricing pressure, higher costs and forex losses.

The company reported a net loss of ₹443 crore for the September quarter against a loss of ₹189 crore in the same period last year.

Revenues for the quarter were upby 9 per cent at ₹11,090 crore over corresponding last year’s ₹10, 170 crore. The company saw a volume growth of 16 per cent, while the pricing was down by around 7 per cent.

UPL in a statement said the contribution margins was primarily impacted by overall pricing pressure in crop protection segment, while its differentiated and sustainable portfolio continued to outperform. Seeds business had a margin accretive growth this quarter, driven by favourable pricing in grain sorghum and corn.

“Our volume growth continues, and we are on the path to achieving our EBITDA and net debt guidance levels. With our fundamentals intact, we saw robust volume growth in our global crop protection business. In India, there was an overall positive momentum. Pushing sales closer to application season has optimised our working capital requirements and minimised likelihood of sales returns. We will continue to focus on enforcing stricter credit and inventory norms to enhance cash flows” said Jai Shroff, Chairman and Group CEO, UPL in a statement.

“On our global seeds platform, Advanta, we are back on track after some headwinds in Q1. Our growth this quarter was margin accretive, driven by favorable pricing in grain sorghum and corn. The continued business momentum is expected to yield favorable results in the second half of the year,” Shroff said.

The UPL scrip closed 7.62 per cent lower on the BSE on Monday at ₹515.10

Mike Frank, CEO, UPL Corporation Ltd said “The fundamentals in the global crop protection market continue to remain strong. We continue to see robust dealer and farmgate demand across most regions for our products, as seen in our 13per cent volume growth this past quarter. Leading this growth was our fungicide segment, led by mancozeb products globally, as well as other premium fungicides in Europe. We had continued growth in our BioSolutions NPP business, which grew 10per cent. Specifically, our biocontrol offerings in Latin America and Europe have received strong customer demand. Additionally, NPP was supported by bio-stimulant volumes in Brazil.”

For the first half of current financial year, UPL Group’s losses increased to ₹827 crore on revenue of ₹20,157 crore. In the same period last year, the company had reported a loss of of ₹23 crore on revenues of ₹19,133 crore.