Uflex says volumes recovering, value added products aiding margin improvement
CFO Rajesh Bhatia said the packaging films manufacturer's overall volume growth for the third quarter was around 5.8%.
Noida-based packaging films maker Uflex is seeing a recovery in volumes in some markets, and expects its value added products portfolio to help improve operational margins.
Value added products include flexible packaging, holographic films, aseptic packaging, etc.
Rajesh Bhatia, CFO of Uflex said there has been a bounce back in volumes in some markets. “We have had about 100% volume increase in this quarter in Mexico business. We have had about 60% volume increase in Nigeria business and about 23% increase in our India packaging business volumes on a YoY (year-on-year) basis,” he said.
Overall volume growth for the third quarter of the current financial year (Q3FY24) was around 5.8%, he added.
The packaging films industry has been facing the impact of a demand-supply mismatch in the BOPET (Biaxially-Oriented Polyethylene Terephthalate) and BOPP (Biaxially-Oriented Polypropylene) film segments. A global demand slowdown has added to the pressure.
In the third quarter (Q3FY24), Uflex revenue declined by 5% to ₹3,310 crore YoY from ₹3,484 crore. However, the operational performance improvement helped narrow losses to ₹67.27 crore from ₹85.47 crore, Earnings before interest, taxes, depreciation, and amortisation (EBITDA) improved 27% YoY to ₹225.86 crore from ₹177.53 crore, and the EBITDA margin improved to 6.82% from 5.09% in the same quarter last year.
For the first nine months (9MFY24), revenue declined roughly 12% YoY to ₹9,937 crore. EBITDA margin contracted to 5.1% from 11.5%. The company posted a loss of ₹420 crore versus profit of ₹480 crore in the same quarter last year.
The third quarter also saw a currency fluctuation impact. “During the stated quarter, we had about ₹158 crore of losses, of which Nigeria itself is about ₹125 crore,” he said.
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Given the huge demand-supply mismatch in Nigeria's foreign exchange earnings as well as the payments, the company continues to see sustained devaluation in the Nigeria Naira vis-à-vis the dollar.
Uflex has a market capitalisation of ₹3,291.40 crore.
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(Edited by : Shweta Mungre)
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