Raymond Reports 70% Drop In Net Profit In FY17

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The impact of demonetisation is reflected in the results of textile and apparel companies.

Raymond Ltd, in 2016-17, has posted a fall of almost 70% in its net profits, compared to the previous financial year. The company's net profit was Rs 26 crore  during 2016-17, compared to Rs 85 crore in the previous year. EBITDA was Rs 423 crore, and EBITDA margin fell 7.7% in the last financial year.

The company earned a net revenue of Rs 5509 crore, 4% higher than in FY16. Net sales also grew 4% to Rs 5391 crore. Compared to the third quarter of FY 2017, the company's performance in the fourth quarter significantly improved. Net revenue in Q4 FY19 was Rs 1506 crore, compared to Rs 1331 in Q3 FY17 (Rs 1437 crore in Q4 FY16). Net sales in the fourth quarter were 13% higher at Rs 1474 crore (Rs 1402 crore in Q4FY16). EBITDA was 76% higher in the fourth quarter at Rs 145 crore, compared to Rs 82 crore in Q3FY17 (Rs 173 crore in Q4FY16). Net profit in the fourth quarter of FY17 was 308% higher at Rs 33 crore, compared to a net loss of Rs 16 crore in Q3FY17 (Rs 53 crore in Q4FY16).

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Branded textiles volumes back on track

In branded textiles, in FY 2017, Raymond had net sales of Rs 2714 crore, compared to Rs 2702 crore in FY16. In Q4FY17, net sales were Rs 737 crore, 9% higher than in Q3FY17 (Rs 735 crore in Q4FY16). Raymond's suitings sales were up 9% valuewise and 20% volumewise in Q4FY17, compared to Q3FY17. Shirting sales were up 9% in terms of value, and 14% by volume. Made-to-measure sales were down 5%.

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Branded apparel sales up

In  branded apparel, Raymond registered a growth of 14% in FY17, to Rs 1270 crore. In Q4FY17, sales were 16% higher at Rs 360 crore compared to the previous quarter (Rs 311 crore in Q4Fy16). During the fourth quarter, the company added 27 new stores and closed 14 stores.

The company's garmenting business recorded net sales growth of 43% in Q4FY17, to Rs 184 crore. In FY17, net sales from garmenting business was Rs 639 crore, up 8% compared to the previous FY. High value cotton shirting net sales in FY 2017 grew 7% to Rs 500 crore. However, in Q4FY17, sales of high value cotton shirting at Rs 106 crore, was 19% lower than in Q3FY17. The company has attributed this to lower offtake by customers, and a slight shift to lower cost synthetic fibres.

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The company has stated that retailers have had to extend EOSS (end of season sales) to liquidate inventories, and many delayed replenishment of new summer season stocks to March, instead of the usual mid-February. Normalcy post demonetisation is gradually happening, which will improve industry performance. Also, higher input costs have impacted industry margins. With cotton prices on the rise, players resorted to product mix optimisation to protect margins.  

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