On Monday, Varun Beverages, the bottler for Pepsi in India, reported a 77% surge in its quarterly profit. This increase was driven by double-digit volume expansion in both domestic and international markets, despite consumers facing higher costs of essential items.
The consolidated net profit for the fourth quarter ending on December 31 surged to 1.32 billion rupees ($15.9 million), marking a notable increase from the 747.5 million rupees recorded in the corresponding period of the previous year.
Urban consumers, with higher average incomes in comparison to their counterparts in rural areas, have played a pivotal role in driving substantial sales for packaged goods manufacturers. This trend persists despite the challenges posed by increased prices of essential commodities.
The Gurugram-based company, with operations spanning across six countries, holds a prominent position as one of PepsiCo’s largest franchisees outside the United States. It specializes in packaging and distributing beverages under the Pepsi, Mirinda, and Tropicana labels.
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As per its investor presentation, Varun Beverages reported a 21% increase in revenue from operations, reaching 27.31 billion rupees during the stated period. Additionally, the company noted positive volume growth.
The quarter witnessed a 1.8% increase in the cost of raw materials, encompassing flavored concentrate, packaging material, and sugar.
Varun Beverages experienced an expansion in its earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, rising to 15.7% from the previous year’s 13.9%. This growth was supported by reduced packaging costs despite an increase in sugar prices.
Last year, the company ventured into the South African markets by acquiring The Beverage Company, a strategic move that analysts predict will be advantageous for the Indian bottler.
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Furthermore, Varun Beverages sanctioned a final dividend of 1.25 rupees per share for the fiscal year concluding on Dec. 31.
The company’s shares, which experienced a surge of over 30% in the December quarter, showed little change in trading following the release of the results.
PepsiCo Inc is scheduled to announce its quarterly results on February 9th.
