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Tata Coffee Reports 58% Profit Growth, Despite Revenue De- Growth Of 7.46%

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Tata coffee has reported lower sales for the quarter. Revenue saw a de-growth of 7.46%. Even with that Tata Coffee managed to churn a profit growth of 58% YoY. Tata Coffee operates in two segments Plantations and Value added Products.  The plantations attribute to 21% of the total revenue. Whereas value added products along with its foreign subsidiary Eight O’ Clock account for 79% of total revenues for the quarter.
Tata Coffee produces 10,000 MT of Arabica and Robusta coffees. It has installed capacity of 8400 MT instant coffee.
The plantations revenue was down by 7% on account of lower plantation output. However the segment reported a profit growth of 150% on account of higher operating efficiency.
The revenue growth from value added business “Instant Coffee” was at 3.6% with current revenue at Rs 115 Crs, however the profit growth is pegged at 75%, currently at Rs 23 Crs. Volume growth and cheaper input cost lead to improved operating margins.
Finished goods inventory decreased due to volume growth.
The company received Rs 16.75 Crs as dividend from its foreign subsidiary. The foreign subsidiary Eight O’ Clock had lower revenue growth and higher profits due to timing of trade promotions and lower commodity prices. The subsidiary has launched a new product to their coffee segment.
Tata Coffee’s “Microlot Coffee” will be for sale in Starbuck outlets in US as a premium product. The company has also stated that their monsoon offerings from the company has generated interest from the international roasters. The company will be focusing on its instant coffee segment and adding more products in the segment.