Asian Paints, India’s leading paint manufacturer, has reported a sharp 45% decline in profits for the fourth quarter of the fiscal year, highlighting ongoing pressure from inflation and increased advertising expenditures. The Mumbai-headquartered company revealed that its consolidated net profit for the quarter ending in March was Rs 692.13 crore, falling significantly short of analyst expectations, which had anticipated a profit of Rs 1,075 crore.

Financial Highlights

In its latest earnings report, Asian Paints disclosed a one-time cost of Rs 183 crore, which includes notable impairments. Specifically, the company faced a Rs 77.8 crore loss related to goodwill on its acquisition of White Teak, along with a Rs 21.5 crore loss concerning Causeway Paints. Furthermore, a Rs 83.7 crore loss was recorded from asset disposals in Indonesia.

• Net Sales: Declined by 4.3% year-on-year, reaching Rs 8,359 crore, slightly below the projected Rs 8,612 crore.
• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA): Dropped 15% to Rs 1,436.20 crore, falling short of the estimated Rs 1,565 crore.
• Profit Margins: Contracted to 17.2%, down from 19.4% a year ago.

Decorative Paints Struggling

Asian Paints continues to dominate the decorative paints market in India, holding over 50% market share. However, the company reported only a 1.8% volume growth in Q4, coupled with a 5.2% revenue decline compared to the previous year. The ongoing challenges include subdued demand, consumer downtrading, and heightened competition.

Amit Syngle, the Managing Director and CEO, commented, “The challenging demand conditions that have persisted for several quarters continued to impact the paint industry, with the market for decorative coatings showing only slight improvement over the previous quarter.”

Resilience in Industrial Sector

In contrast to the decorative segment, the industrial paints division demonstrated strong performance, achieving a 6.1% growth during the quarter. This success was largely due to robust demand in the general industrial and automotive sectors.

Challenges in Home Decor and International Markets

The company’s home decor product lines faced a challenging quarter, reflecting pressure on disposable incomes for households. Additionally, the international segment saw a 1.5% decline in value, primarily attributed to difficult macroeconomic conditions in Africa.

In summary, while Asian Paints grapples with significant challenges in the decorative paints market, its industrial division shows promise. The company’s ability to adapt to these fluctuating conditions will be crucial as it moves forward into the new fiscal year.