Tata Consumer Products reports 1% profit rise in Q2 FY25 as tea costs weigh on margins

INDIA – Tata Consumer Products Ltd (TCPL) has reported a 1 percent rise in its consolidated net profit to Rs 367.21 crore (US$43.7M) 5for the second quarter ending September 2024, as tea cost pressures weighed on the company’s margins.  

Revenue from operations grew by 12.87 percent to Rs 4,214.45 crore (US$501.3M), up from Rs 3,733.78 crore (US$444.1M) during the same period last year. 

The rise in tea costs across India significantly impacted the company’s performance, according to TCPL Group Chief Financial Officer Ashish Goenka.  

“On the margin, the biggest impact has been on tea costs. We have seen a significant increase in raw tea prices across both North India and South India,” Goenka said. 

Profit before exceptional items and tax dropped by 16.06 percent to Rs 424.24 crore (US$50.5M), primarily due to higher finance costs and amortization expenses related to recent acquisitions.  

The company noted that group net profit before exceptional items grew 3 percent to Rs 388 crore (US$46.2M) during the quarter. 

Despite the cost pressures, TCPL recorded a strong topline growth of 13 percent and an EBITDA growth of 11 percent for the quarter.  

Managing Director and CEO Sunil D’Souza commented on the results, saying, “We delivered a topline growth of 13 percent in Q2 FY25, with EBITDA growth of 11 percent. During the quarter, we recorded continued growth and market share gain in the India salt business, as well as strong growth in Tata Sampann and Tata Soulful. However, our India tea business was impacted by subdued category trends.” 

TCPL’s branded business, which includes tea, coffee, water, and other value-added products, saw a 12.44 percent rise in revenue to Rs 3,771.2 crore (US$448.6M).  

Within India, the branded business grew 10.44 percent to Rs 2,655.19 crore (US$315.8M).  

Non-branded business revenues, which consist of the company’s plantation and extraction business, surged 19.05 percent to Rs 462.28 crore (US$54.99M). 

In the domestic market, India Beverages recorded a 3 percent revenue growth, while coffee showed strong momentum with a 29 percent growth for the quarter.  

The India Foods business grew 28 percent, driven by the value-added salt portfolio and Tata Sampann, which surged 26 percent. 

Tata Starbucks, a 50:50 joint venture between TCPL and Starbucks Corporation, continued its expansion, adding 19 new stores across five new cities, bringing the total to 457 stores in 70 cities. 

Looking ahead, TCPL’s tea business, Tata Tea, is planning price hikes across its brand portfolio in the coming months to offset rising input costs and expand profit margins. 

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