Kolkata: Tata Global Beverages Ltd reported a 28% on year decline in its consolidated net profit to 693 mln rupees for the quarter ended Mar 31, below pre-earnings estimates of 1.1 bln rupees by four brokerages.

The company attributed the fall in bottomline to higher expenditure on brands, new initiatives and exceptional items.

The net impact of the exceptional item to the bottomline, during the Jan-Mar quarter stood at 117.2 mln rupees as against a net gain of 5 mln rupees in the corresponding period a year ago.

During the quarter under review, Tata Global reported a 3% on year rise in its consolidated net sales to 18.65 rupees, below analysts’ estimates of 9% on year rise to 19.79 bln rupees.

At 1324 IST, shares of Tata Global Beverages were trading down 4.8% at 148.70 rupees on National Stock Exchange.

Operating profit of the company during the quarter ended Mar 31, was also down by 20% to 1.54 bln rupees as against 1.93 bln rupees in the corresponding quarter a year ago.

The company attributed this dip in operating profits to higher investments in different brands during the quarter.

Total expenditure of the company grew by 6% on year in Jan-Mar to 17.56 bln rupees, and total income was higher by 3.3% on year to 19.1 bln rupees.

Advertisement and promotional expenses was higher by 13.6% on year to 3.5 bln rupees.

DISMAL SEGMENT RESULTS

One of the reasons for Tata Global’s poor quarterly results was the dismal performance of its key businesses, tea and coffee, during Jan-Mar.

While tea business registered decline in revenue growth and profitability, largely due to seasonality, coffee business failed to arrest the declining profit growth over the last few quarters.

Revenue from tea business of the company grew by 5% on year to 14.4 bln rupees during Jan-Mar, and profit from the segment was lower by 10% at 1.68 bln rupees.

Coffee business’ revenue declined by almost 3% on year to 4.5 bln rupees and the segment profit was down by 54% on year to 325.5 mln rupees.

Tea and coffee businesses contribute around 77% and 23%, respectively, to Tata Global’s topline.

The Kolkata-registered company’s domestic business contributes about 30% to revenue and 35% to earnings before interest and tax. International operations contribute 70% to revenue.

Tata Global retails brands such as Tetley Tea in the UK and Eight O’Clock Coffee in the US.

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