Saturday, July 20, 2024

Adani Wilmar’s edible oil sales decline in Q4, food and FMCG biz rises over 60%

As per the regulatory filing, in Q4FY23, edible oils posted a decline in mid-teens in value and flat performance in volumes.

Edible oils sales volume rose by 4% in Q4, on the back of good consumer demand due to softened edible oil prices. However, Adani said, “Overall oil sales volume was dragged down due to lower demand from bakery and frying industry.”

Adani stated that the “focus on the domestically produced Mustard oil has been showing consistent results and it has been the fastest growing oil for us. ‘Fortune’ is the only pan-India brand in the Mustard Oil segment and enjoys the leadership position. However, it is a very fragmented market, providing us the opportunity to keep gaining market share.”

Mustard, which is a key domestic oilseed, Adani expects to harvest a record bumper crop in FY23 at close to ~11 million MT, ~5% higher than the previous year.

Adani believes that improvement in its overall distribution and gaining market share of the edible oils business in the under-indexed region will be the key volume levers for the segment.

Coming to the foods & FMCG business, Adani said, “the Food business is executing well on its long-term plan and scaling up its operations across India, registering a volume growth of more than 40% YoY in Q4FY23, with good growth in both the key categories – Wheat & Rice. We expect the strong growth to continue in both the products for multi-years, given the large headroom in the kitchen essential products.”

Food and FMCG business posted over 60% growth in sales during Q4.

Also, Adani said on an overall basis, “The company continued its growth story with year-on-year volume growth of close to 14% in FY23, which enabled it to cross 55,000 Crores of revenue for the year. The company made good progress in scaling up its operations and gaining market share across food products.”

Adani closed the financial year of FY23 with around 3,800 crore in revenue in the food & FMCG segment — registering a robust growth of about 40% YoY in volumes and 55% YoY in revenue terms, while seeding multiple new avenues of growth during the year.

Furthermore, the industry essentials business posted over 60% growth in volumes, while in terms of value — the sales were in the low-teens. Adani said, “Our B2B business of selling industrial products for various industry applications has been gaining market share and made progress in the journey of adding value-added products.”

Notably, despite the decline in the export volume of castor oil for the industry, Adani Wilmar’s overall castor business grew in double digits in volume terms in Q4FY23.

Additionally, Adani’s alternate channels (E-commerce, Modern Trade, e-B2B serving GT) have been growing at a faster clip and registered a strong volume growth of ~23% YoY in FY’23, for the combined portfolio of oil & foods. In FY’23, these channels contributed 2,700 crore of revenue for the Company.

Overall, Adani Wilmar’s standalone volumes growth is in the high-teens, however, it is a drop in high-single digits in value terms during Q4FY23.

In the coming years, Adani Wilmar aims to reach 1 million retail outlets directly, from its current reach of ~0.6 million. Also, the company plans to bring most of the over 5,000 population towns under its direct coverage.

On Thursday, Adani Wilmar’s share price closed at 409.55 apiece up by 3.34% on BSE.

Outlook ahead:

Giving an outlook ahead, Adani Wilmar said, “We expect the demand for packaged oils and staple foods to remain healthy despite the various macro-economic and geo-political events. With our expertise in commodities and strong sourcing partnerships, we will continue to navigate the price volatilities and any supply disruptions.”

The company believes that the chances of the occurrence of El Nino in May or June 2023, may cause the weakening of the southwest monsoon and could cause heatwaves & drought in India, negatively impacting the crops.

In the case of Soya crop in Argentina, the company highlighted that an unprecedented drought in Argentina in 60 years, the world’s top exporter of soy and no. 3 for corn, has led to sharp cuts to the soybean and corn harvest forecasts. Further, in regards to the wheat crop, it said, “recently there have been concerns on wheat crop output over heatwave in February 2023 and untimely rains in March 2023.”

Lastly, on biofuel mandates, Adani Wilmar said, “Biodiesel mandates by Brazil, Malaysia & Indonesia may impact the crude edible oil prices of soyabean and palm.”

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