Asian Paints Q2 FY25 Results: Profit Drops 42% Amid Weak Demand and Rising Costs

On November 09, Asian Paints announced its Q2 FY25 financial results, revealing a decline in both profit and revenue compared to the same period last year. This quarter saw challenges from weak consumer demand and rising costs.

Financial Performance Overview

Asian Paints’ consolidated net profit fell by 42.4% year-on-year, reaching ₹694.64 crore, down from ₹1,205.42 crore in Q2 FY24. Revenue from sales also dipped by 5.3% to ₹8,003.02 crore, compared to ₹8,451.93 crore last year.

Domestic Market Challenges

According to Amit Syngle, Managing Director and CEO, the paint industry faced low demand, with extended rains and flooding affecting sales. The Domestic Decorative Coatings segment experienced a slight volume decline, and overall revenue for the domestic coatings segment dropped by 5.5% due to consumer sentiment and weather disruptions.

Profit Margins

The company’s profit before depreciation, interest, tax, and other income (PBDIT) dropped by 27.8% to ₹1,239.5 crore, compared to ₹1,716.2 crore in Q2 FY24. PBDIT margins also declined to 15.5% from 20.3% in the previous year, impacted by prior price cuts, higher material costs, and rising sales expenses. Syngle expects these margins to improve in the next quarters as recent price increases are expected to offset costs.

Dividend Announcement

Asian Paints announced an interim dividend of ₹4.25 per share for FY25. Shareholders on record by November 19, 2024, will receive their dividend on or after November 28, 2024.

Segment-wise Performance

International Business

International sales decreased by 0.7% to ₹769.5 crore, affected by macroeconomic issues and currency devaluation in Ethiopia, Egypt, and Bangladesh. However, on a constant currency basis, sales grew by 8.7%. The international segment reported a pre-tax loss of ₹21.5 crore compared to a profit of ₹40.4 crore in the prior year.

Home Décor Business

• Bath Fittings: Sales rose by 2.1% to ₹83.1 crore, though PBDIT reported a loss of ₹5.8 crore, compared to a loss of ₹2.1 crore in Q2 FY24.
• Kitchen Business: Sales increased by 8.8% to ₹105.3 crore, with a marginal PBDIT loss of ₹0.1 crore against a profit of ₹0.9 crore in the previous year.
• White Teak and Weatherseal: White Teak sales grew by 19.2% to ₹31.1 crore, and Weatherseal sales rose by 4.8% to ₹13.2 crore.

Industrial Business

• APPPG: Sales grew by 6% to ₹265.5 crore, with a PBT of ₹18.5 crore, down from ₹28.4 crore in the same period last year.
• PPGAP: Sales increased by 5.9% to ₹524.4 crore, while PBT rose to ₹82.5 crore from ₹77.1 crore in Q2 FY24.

Asian Paints remains focused on strengthening its brand, supply chain, and distribution network to navigate the challenging market and position itself for future growth.

On November 11, 2024, Asian Paints share price opened at ₹2,565.05 and touched the day low of ₹2,506.00 as of 10:46 AM on NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.