Godrej Agrovet Limited (“GAVL”) has today announced its financial results for the first quarter ended June 30, 2022
HIGHLIGHTS OF FINANCIAL PERFORMANCE (Q1 FY23)
Q1 FY23 consolidated total income increased to Rs. 2,517.5 crore from Rs. 2,003.2 crore in Q1 FY22, a growth of 25.7% year-on-year
Company reported consolidated EBITDA of Rs. 169.3 crore in Q1 FY23 as compared to Rs. 180.0 crore in Q1 FY22
Company reported Profit before tax of Rs. 102.8 crore in Q1 FY23 as compared to Rs. 126.2 crore in Q1 FY22
MANAGING DIRECTOR’S COMMENTS
Commenting on the performance, Mr. B. S. Yadav, Managing Director, Godrej Agrovet Limited, said:
Godrej Agrovet started financial year 2022-23 with a robust growth in volumes and topline in the first quarter ended June 30, 2022. All of our businesses, with the exception of Crop Protection, registered a strong volume growth.
We achieved year-on-year growth of 25.7% to clock total income of Rs. 2,517.5 crore in Q1 FY23. However, it was a challenging quarter in terms of profitability as most of our businesses recorded margin contraction owing to combination of factors such as high cost inventory, input cost inflation, deferment
of sales and limited transmission etc. Decline in margin was witnessed in Animal Feeds, Crop Protection and Dairy businesses while Vegetable Oils and Poultry segments reported a growth in operating margin.
On Macro front, the arrival of south-west monsoon was late by few weeks and therefore, led to delay in sowing of Kharif crops, especially Cotton. Soymeal prices declined sharply in May 2022 as Government of India allowed import of GM soymeal to the tune of 0.55 million MT. Crude Palm Oil prices reached record high levels in May 2022 owing to three-week exports ban by Indonesian Government, a largest producer and exporter of palm oil.
Prices
have been gradually correcting since the lifting of exports ban in the last week of May. In Dairy sector, milk procurement prices continued to increase further along with other input costs as well. In Poultry sector, live bird prices were considerably higher than the previous year and remained well above the feed costs.
Our Animal Feed business recorded double-digit growth in volumes, however suffered from high cost inventories of key raw materials. Vegetable Oil business continued to reap benefits of higher oil prices and improved efficiency levels as segment results grew by 2.6x year-on- year. Standalone Crop Protection business was impacted by deferred liquidation on account of delayed Kharif sowing and lower placements to maintain channel hygiene.
Astec LifeSciences reported another quarter of significant increase in topline; however, growth was constrained by deferment of revenues while margin contraction in one of the products impacted bottomline performance. Both of our Food businesses reported strong volume growth year-on-year. For Poultry and Processed Food business, Q1 was a very good quarter led by favorable demand dynamics in Real Good Chicken (RGC) and significant increase in Live Bird prices throughout the quarter. Our Dairy subsidiary, Creamline Dairy achieved further market share gains in key value-added products registering 47.6% topline growth.
However, sustained rise in procurement and packaging costs led to subdued profitability. During the quarter, Godrej Agrovet successfully completed submission of Greenhouse Gas (GHG) emissions reduction roadmap target in line with Science Based Target’s (SBTi) “Well Below 2 0 C” scenario. In doing so, GAVL became first Agri company in India to commit to reduction in Scope 1 & Scope 2 GHG emissions by 37.5% and Scope 3 emissions by 16.0% by FY 2035. We also continued to make good progress in achieving 2025 sustainability targets.
SEGMENT-WISE BUSINESS HIGHLIGHTS
Animal Feed
In Q1 FY23, robust year-on-year volume and revenue growth of 11.4% and 24.4%, respectively, was driven by market share gains. Volume growth was recorded across key categories i.e. Cattle (+12% year-on-year), Broiler (+20%) and layer (+8%).
However, Segment results were impacted, albeit temporarily, by high cost inventories of key raw materials. Unforeseen Government interventions led to sudden decline in raw material prices.
Vegetable Oil
Segment revenues and segment results grew by 33.4% and 163.2% year-on-year respectively in Q1 FY23 on account of improvement in oil extraction ratio (OER) coupled with record high oil prices. Prices of crude palm oil and palm kernel oil increased by 24% and 41% year-on-year, respectively, during the first quarter.
During the quarter, Company signed Memorandum of Understanding (MOUs) with State Governments of Assam and Manipur for development and promotion of oil palm cultivation under the National Mission on Edible Oils-Oil Palm (NMEO-OP) scheme.
Crop Protection (Standalone)
Crop Protection segment was impacted by delayed monsoon and deferred application of agrochemicals. Segment reported 17.6% year-on-year decline in revenues. Strict focus on channel credit hygiene also led to lower sales as compared to the last year.
Segment results stood at Rs. 26.1 crore in Q1 FY23 as compared to Rs. 64.0 crore in the same period last year.
Astec LifeSciences
Astec registered solid topline growth of 43.3% on the back of higher export realisations and CMO volumes. Although, growth was constrained by deferment of sales to the tune of ~20% of Q1 revenues.
Geographically, growth in Q1 FY23 was driven by exports sales, which accounted for 49% of the segment revenues and grew by 215% year-on-year.
Astec witnessed decline in margin profile in Q1 FY23 owing to margin compression in one of the products, deferment of sales and increased cost structure on account of the herbicide plant.
Dairy
Dairy business recorded strong growth in volumes and topline in Q1 FY23, primarily led by market share gains in value-added products.
However, sustained rise in procurement and packaging costs led to subdued profitability. Godrej Tyson Foods Limited
GTFL achieved 39.8% growth in segment revenues in Q1 FY22 led by Real Good Chicken (RGC) and Live Bird categories.
RGC volumes increased by 82% while realisations in the live bird business improved by 43% in Q1 FY23 vs Q1 FY22
Consequently, GTFL reported significant improvement in EBITDA margins as compared to previous year
ACI Godrej Agrovet Private Limited, Bangladesh
In Q1 FY23, ACI Godrej continued with its upbeat performance and posted revenue growth of 42.0% year-on-year. The growth was driven by combination of higher realizations and increase in volumes by 14.2% during the quarter.
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