Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved double-digit volume growth, with high single-digit growth in paints and strong double-digit growth in coatings.
- Improved gross margins by 160 basis points through product mix and sourcing efficiencies.
- Highest ever absolute performance across revenue, gross margin, EBIT, and PAT.
- Strong performance in B2B businesses, contributing significantly to overall growth.
- Focused on leveraging high-end technology and innovation, with new product launches like Dulux VT Eterna and Interpon A3000.
Negative Points
- Paints segment experienced muted growth, reflecting industry-wide challenges.
- Faced several headwinds including heatwave, labor shortages, and limited demand conditions.
- Value growth lagging behind volume growth, expected to catch up only by early next year.
- Increased raw material prices necessitated a 1.5% price hike between July and mid-August.
- Higher operational expenses due to increased brand spends, including celebrity endorsements.
Q & A Highlights
Q: Can you share the number of tinting machines currently in use and the target number of retailers for FY25?
A: We have around 16,500 to 17,000 tinting machines. Our focus is on ensuring these machines are productive. We aim to reach 25,000 retailers by next year, up from the current 23,000-23,500 outlets.
Q: What was the B2B versus B2C volume growth for this quarter?
A: B2C saw high single-digit growth, around 9%, while B2B experienced approximately 12% growth. This includes paints B2B, not just coatings.
Q: Why did EBITDA margins not grow despite an increase in gross margins? Can you share the brand spends for last quarter versus this quarter?
A: We can't disclose specific brand spend figures due to competitive reasons, including celebrity endorsement fees. However, the increased brand spend, including signing Rocking Star Yash, impacted EBITDA margins.
Q: What additional strategies are being implemented to increase market share in the decorative paints segment?
A: We are focusing on large dealer-specific programs, dialing up Dulux Assurance, and entering new segments like construction chemicals. We aim to charge a premium by offering differentiated, high-quality products.
Q: How is the competitive landscape in the industrial paints segment?
A: The competition is heating up, especially as growth in the decorative segment slows. However, our world-class products and strong customer relationships, both locally and globally, position us well.
Q: What are the geographical growth trends in the decorative paints market?
A: The southern states faced higher headwinds last quarter, while the western and northern regions showed stronger growth. We expect the southern market to bounce back soon.
Q: Do you anticipate the need for more price increases in the coming months due to cost inflation?
A: We have already implemented a 1.5% price increase to cover rising raw material costs. The situation remains volatile, and we are focusing on sourcing efficiencies to manage costs without compromising quality.
Q: How has the project business performed this quarter, and what is its contribution to the overall decorative segment?
A: The project business contributes about 20% to the decorative segment and achieved double-digit growth by the end of June.
Q: What is the strategy for launching mass and economy products where Akzo Nobel has a lower market share?
A: We are working on new products and innovations to enter the mass market. Our goal is to increase our market share from the current 2-3% to around 5-6%.
Q: Can you share insights on the company's strategy for the super-premium segment?
A: We leverage global formulations and world-class products to offer differentiated solutions. Our recent launch, Dulux VT Eterna, is an example of bringing high-quality products to the Indian market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
