Agro-chemical firm UPL Ltd has reported a net loss of Rs 189 crore for the second quarter of 2023-24, due to a decline in revenue caused by global ‘channel destocking’. This is in contrast to a net profit of Rs 814 crore in the same quarter last year. The company’s total income for the quarter was Rs 10,170 crore, compared to Rs 12,507 crore in the previous year.
In terms of the company’s operations in India, revenue was Rs 1,387 crore during the quarter, down from Rs 1,809 crore in the year-ago period. UPL Corporation Ltd CEO Mike Frank commented on the challenging state of the global agrochemical industry, citing decreased prices, elevated channel inventory levels, and intense price competition.
As a result, distributors prioritized destocking and focused on purchasing at lower prices to reduce inventory costs. This destocking had a significant impact in the US and Brazil during the first half of the year. Frank acknowledged that UPL’s revenue and profitability for the second quarter were significantly affected by these factors.
Looking ahead, the company remains optimistic about its performance in the second half of the fiscal year, as major cropping seasons begin in key geographies such as North America, Latin America, and Europe. The company expects elevated inventory levels to gradually decrease, as farm gate demand remains strong. Inventory levels in Europe, Asia, and Latin America (excluding Brazil) have largely normalized, while improvement continues in North America and Brazil.
Regarding pricing, Frank stated that most post-patent molecule prices appear to have reached a bottom in the second quarter and are now stabilizing. Despite the challenging market conditions, the company remains focused on executing its strategies and implementing changes to its operating model to improve business performance as the cycle normalizes.
The company’s shares settled at Rs 538.40 apiece, down 3.64 percent on the Bombay Stock Exchange (BSE).
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