Asian Paints reports 25% drop in Q1 FY25 net profit

MUMBAI: Asian Paints Ltd, India’s largest paint manufacturer, reported a sharp decline in its consolidated net profit for the first quarter of FY25, highlighting the impact of a challenging demand environment.

The company’s Q1 FY25 net profit fell by 24.54% to Rs 1,170 crore from Rs 1,550.37 crore in the same period last year. This decline was steeper than analysts’ estimates.

The company’s revenue from operations also saw a dip, decreasing by 2.32% year-on-year to Rs 8,970 crore from Rs 9,182.31 crore. Consolidated net sales similarly fell by 2.3% to Rs 8,943.2 crore from Rs 9,153.8 crore, reflecting the tough market conditions.

“Demand conditions for the paint industry were tough, impacted by the severe heatwave and general elections in the quarter,” said Amit Syngle, Managing Director & CEO of Asian Paints.

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Despite these challenges, the company managed to achieve a 7% volume growth in the decorative segment, although the value declined by 3% due to earlier price reductions and a shift in product mix.

Syngle pointed out that unanticipated material price inflation and supply chain challenges further impacted the profitability of the Decorative business. The PBDIT (Profit before depreciation, interest, tax, other income, and exceptional items) margin shrunk to 18.9% from 23.2% in the previous year, with PBDIT falling 20% to Rs 1,693.8 crore from Rs 2,121.3 crore.

The Industrial business, however, showed resilience with a 5.8% growth, driven by the Auto OEM and powder coatings segments. “We saw good offtake in the economy segment aided by the launch of our revolutionary latex paint NeoBharat, part of our strategy to penetrate the ‘bottom of the pyramid’ segment,” Syngle added.

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On the international front, sales decreased by 2.3% to Rs 679.1 crore from Rs 695.1 crore, affected by economic uncertainty, forex crises, and liquidity issues in key markets such as Asia and Egypt. “In constant currency terms, sales increased by 1.8%,” the company stated. However, PBT (Profit Before Tax) before exceptional items dropped to Rs 6.5 crore from Rs 26.5 crore.

Looking ahead, Syngle expressed optimism, stating, “In the near term, we expect demand conditions to improve on the back of improving rural sentiment and monsoons picking up gradually. We remain focused on driving growth through enhanced saliency of our brand, innovation, and customer-centricity.”

The company’s Home Décor business showed positive trends, with sales in the bath fittings segment increasing by 10.3% to Rs 93.4 crore and the kitchen business growing by 4.6% to Rs 100.4 crore. Recent acquisitions like White Teak and Weatherseal also performed well, with sales increasing by 14.3% and 17.6%, respectively.

Despite the current challenges, Asian Paints continues to navigate through the tough market conditions, aiming to leverage brand strength and innovation to drive future growth. The company’s shares closed 0.4% higher at Rs 2,968 on July 16, ahead of the earnings announcement.