Release Date: May 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved top-line growth of 2% driven by double-digit volume growth despite a challenging quarter.
- Gross margins expanded by 110 basis points due to price drops.
- Profit after tax increased by 14% year-on-year, reaching INR108.8 crores.
- Return on capital employed is almost at 45%, indicating efficient use of capital.
- Announced an interim dividend, reflecting a commitment to shareholder returns.
Negative Points
- Muted demand and price cuts impacted the overall revenue growth.
- Retail segment underperformed, contributing to only 20% of the decorative business.
- Challenges in maintaining product availability and assortment in certain markets.
- High competition in the market with new entrants like Grasim posing potential threats.
- Need for increased advertising and promotional expenses to maintain and grow market share.
Q & A Highlights
Q: What has been the revenue and volume growth of the projects business?
A: We wouldn't be able to split it, but suffice to say, the projects business is growing double-digit, both in volume and value.
Q: What kind of growth can be expected in the projects business over the next three to five years?
A: As long as the GDP is powered by public investments, particularly in infrastructure, the projects business is expected to sustain double-digit growth.
Q: What has been the revenue and volume growth of the coatings business?
A: The volume growth was in double digits, while the revenue growth was mid-single digits due to a price drop of 4.5%.
Q: How is Akzo Nobel's standing in the coatings business in India compared to globally?
A: Globally, we are number one in powder coatings with almost 30% market share. In India, we participate largely in the premium segments and are expanding capacity to become more aggressive.
Q: What is Akzo Nobel's strategy to compete in the highly competitive Indian market?
A: Our strategy focuses on brand quality, best-in-class products, increasing distribution reach, addressing painter challenges, and leveraging digital solutions.
Q: How has Akzo Nobel improved its supply chain to ensure product availability?
A: We have embarked on a replenishment model for distributors, leveraging technology to track and address product availability issues in real-time.
Q: What is the outlook for raw material prices and their impact on margins?
A: Raw material prices have been stable, and we expect this trend to continue unless there are global disruptions. We are focused on maintaining margins through cost control and efficiency improvements.
Q: How does Akzo Nobel plan to handle the increasing competition from new entrants in the market?
A: We are focused on consolidating and growing our market position. Our strategy includes leveraging our strengths in quality, brand, and distribution to compete effectively.
Q: What are the key industries served by the coatings business, and which sectors are performing well?
A: We serve various growth sectors including energy, wind, EV, solar, infrastructure, and downstream oil. All these sectors are performing well and contributing to our growth.
Q: What is the current distribution reach of Akzo Nobel, and how has it grown in FY24?
A: We have over 20,000 outlets and are focused on increasing this to 30,000 in the next few years. Our distribution strategy emphasizes effectiveness and meaningful outlet engagement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
