Varun beverages reports Q4 FY24 profit below estimates despite growth in Africa
INDIA – Varun Beverages Ltd. (VBL), the Indian bottler for PepsiCo, has reported a lower-than-expected fourth-quarter profit as rising raw material costs offset the company’s volume growth, particularly from its expanding African operations.
During the quarter ended December 31, VBL’s revenue from operations rose 39.8 percent to nearly Rs 3,818 crore (US$439.7M).
However, expenses surged 41.3 percent due to higher costs of raw materials, including sugar, flavorings, glass bottles, and packaging, along with increased value-added taxes.
The company reported a net profit of Rs 185 crore (US$21.12 million), reflecting a 40 percent increase from the previous year. However, this fell short of analysts’ expectations, which had projected profits of Rs 211 crore (US$24.3M), according to data compiled by LSEG.
For the full year 2024, VBL’s revenue from operations stood at Rs 143,486 million (US$1.65B), up from Rs 126,328 million (US$1.46B) in the previous year. The company attributed its growth to a combination of organic volume expansion and a diversified product mix.
VBL has been aggressively expanding its footprint in Africa, targeting key markets such as South Africa, Ghana, and Tanzania.
Chairman Ravi Jaipuria highlighted the company’s recent growth in new territories, stating, “We are pleased to conclude CY2024 on a strong note through adding geographical presence into new territories of South Africa along with distribution rights in Namibia, Botswana, Mozambique, and Madagascar. We also started greenfield operations in the Democratic Republic of Congo (DRC).”
The company’s India volumes grew by 11.4 percent, while consolidated volumes increased by 23.2 percent.
This volume growth contributed to a 24.7 percent increase in consolidated revenues, a 30.5 percent rise in EBITDA, and a 25.3 percent jump in profit after tax (PAT) for the year.
Looking ahead, VBL stated that it remains committed to expanding its presence in both domestic and international markets through deeper market penetration, capacity expansion, and continued investments in technology and sustainability.
Recently, the company announced a Rs 412.80 crore (US$48.19 million) investment in its South African subsidiary, The Beverage Company Proprietary Limited (Bevco).
The fresh investment will support debt repayment and strengthen Bevco’s balance sheet for further business growth.
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