UPL posts net loss of Rs 1,217 Cr in Q3 FY24

Company’s revenue from Europe declined by 30 per cent YoY, followed by Latin America (down 28 per cent YoY) and India (down 20 per cent YoY).

The agrochemical major UPL Ltd has reported a consolidated net loss of Rs 1,217 crore in Q3 FY24 as against a net profit of Rs 1,087 crore recorded in Q3 FY23. Company’s revenue from operations declined 27.72 per cent YoY to Rs 9,887 crore in the quarter ended 31 December 2023. Loss before exceptional items and tax was at Rs 1,649 crore as against profit before exceptional items of Rs 1,515 crore reported in the same quarter a year ago.

Revenue and EBITDA for Q3 continued to be impacted by global channel destocking and ongoing pricing pressure in post patent space exacerbated by higher rebates, company mentioned. UPL’s income from North American tumbled 64 per cent YoY, revenue from Europe declined by 30 per cent YoY, followed by Latin America (down 28 per cent YoY) and India (down 20 per cent YoY) and rest of the world shed by 12 per cent YoY during the period under review.

UPL said that the revenue and EBITDA for Q3 continued to be impacted by global channel destocking and ongoing pricing pressure in post patent space exacerbated by higher rebates.

During the quarter, contribution profit jumped 54 per cent YoY to Rs 2,689 crore and contribution margin declined to 42.6 per cent from 42.6 per cent in Q3 FY23. Liquidation of high-cost inventory, and higher rebates to support channel partners, impacted contribution margin, as per the statement.

The company’s revenue from crop protection was at Rs 8,495 crore (down 30.68 per cent YoY) and non -agro came in at Rs 520 crore (down 9.25 per cent YoY). However, income from seeds business was at Rs 931 crore (up 2.08 per cent YoY)

Mike Frank, CEO, UPL Corporation, said, “Destocking continued to weigh down the global agrochemical market. Overall, prices remained stable QoQ in the crop protection business but came off significantly as against with the high base of previous year amid intense post patent price competition.

However, we did see a pick-up in volumes in Latin America, and a double-digit growth in revenue in the RoW region. Our high margin differentiated and sustainable portfolio continued to outperform as revenue 2 share of this portfolio increased to 37% of crop protection revenue (ex-India) vs 28 per cent last year. Contribution margins too were down only marginally versus last year adjusted for the short-term impact of high-cost inventory liquidation and higher rebates to channel partners.

We continued to implement cost optimization initiatives to align our operations with the new reality, reducing SG&A expenses by 19 per cent YoY in Q3. We are well on track to reduce our SG&A by $100 million in FY25 (from the base of FY23). Going forward, while we are optimistic of a progressively improved performance in Q4FY24 and Q1FY25, we expect normalized business performance from Q2FY25. Our foremost priority is reducing debt. In-line with this, we have also recently announced a rights issue of upto $500 million and are exploring capital raise opportunities at platforms in addition to operational cash flows.”

Company’s revenue from Europe declined by 30