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.