CCL Products (India) Ltd Q3 FY24 Earnings Conference Call Insights

Key highlights from CCL Products (India) Ltd (CCL) Q3 FY24 Earnings Concall

• Financial Performance
  • Revenue of INR664.48 crores for Q3 FY2024, up 24% vs last year.
  • Net profit of INR63.29 crores, down 13% vs last year.
  • EBITDA of INR112 crores.
  • About 800 metric tons of shipments deferred from Dec. to Jan. which led to lower Q3 sales than expected.
  • 9 months YTD revenue of INR1,926 crores, up 24% vs last year.
  • 9 months YTD EBITDA of INR329 crores, up 15%.
• Outlook
  • Expects to meet full year revenue growth guidance.
  • Volume growth expected to recover in Q4.
  • Profit guidance impacted by Vietnam issue pending insurance claim.
• Coffee Outlook
  • No slowdown in coffee demand seen.
  • If anything, pent-up demand driving prices higher.
  • Vietnam crop concerns adding to tight supply perceptions.
  • Coffee prices at multi-decade highs and keep rising.
  • Tight supply outlook and speculative buying driving prices.
  • Prices expected to remain high in near term.
• Capacity Expansion
  • India capacity expansion on track for March.
  • Vietnam expansion on track for Jul-Sep quarter.
  • Vietnam has 40-50% volume growth from new capacity and aggressive selling.
  • Low margin contracts impacted consolidated margins by 2-3%.
  • Expansions to help meet robust market demand.
• India Business Growth
  • India domestic business at INR230-235 cr in 9 months.
  • Branded business at INR145 cr in 9 months, projected to reach INR200 cr this year.
  • Seeing 40-50% growth momentum in brands after correction in Q1/Q2.
  • Growth across GT, MT and e-commerce channels.
• UK Acquisition Update
  • Transition period over, started taking over operations from July.
  • Spent 4-5 months reworking product, packaging, promotions with partners.
  • Relaunch with new packaging and products end of March.
  • This year’s numbers not significant, only 15 stores.
  • Will update after March relaunch on market response.
• Margin/EBITDA Outlook
  • No major deviation expected in margins.
  • Product mix changes between spray dried and freeze dried to impact margins.
  • Focus on small packs and specialty coffee to improve margins.
  • Offset by factors like Vietnam lower margin contracts.
  • Guidance of volume and EBITDA growth remaining aligned holds at annual level.
  • Confident of achieving 18-20% EBITDA growth guidance.
  • Vietnam losses and margin pressure while catching up volumes impacts growth.
  • Volume-led growth in next 2 years rather than margin expansion.
  • Small packs ratio increasing gradually from 20% now.
  • 30% ratio over time to drive margin improvement.
• Working Capital
  • Working capital facility increased by INR200 cr in India to INR600 cr.
  • Vietnam working capital limit increased from $15 million to $45 million.
  • Overall working capital increased from INR600 cr to INR1000 cr.
• Business Growth
  • Currently have 4,000 vending machines, looking to build aggressively.
  • Adopting cautious approach for sustainable model.
  • Target to build INR100 cr business from vending in next 3-5 years.
  • Work with many coffee D2C brands and chains on backend.
  • Aiming for INR200 cr branded business this year.
• Gross Margin and Ad Spend
  • 30% gross margins for overall domestic business.
  • 5-7% higher for branded business specifically.
  • Ad spend at 8-10% of sales.
• China Business Potential
  • Negligible volumes currently to China.
  • Seeding market in partnership with associate.
  • Expect volumes to start picking up going forward.