Q3 results of Varun Beverages: Company’s profit up 36% to ₹196 crore

Varun Beverages Ltd (VBL), PepsiCo’s largest franchise bottler, on Monday reported 36 per cent rise in consolidated net profit at ₹195.64 crore for December quarter 2024, driven by volume growth and improved margins.

The company, which follows the calendar year as its financial year, had posted a net profit of ₹143.76 crore during October-December period a year ago, according to a regulatory filing from VBL.

Revenue from operations was higher at ₹3,817.61 crore during the fourth quarter as against ₹2,730.98 crore in the corresponding period last fiscal.

The ‘EBITDA increased by 38.7 per cent to ₹579.97 crore from ₹418.29 crore,’ it said in an earning statement.

Total expenses were at ₹3,607.43 crore as against ₹3,862.25 crore earlier.

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For the full year 2024, consolidated net profit was up 25.3 per cent to ₹2,634.28 crore. Revenue from operations was higher at ₹20,481.32 crore as against ₹16,321.06 crore in 2023.

Moreover, in 2024 ‘mix of low sugar / no sugar products increased to 53 per cent of our consolidated sales volumes from 42 per cent in CY2023,’ it said.

In 2024 , EBITDA margin improved by 105 basis points to 23.5 per cent, driven by improvement in gross margins, which was partially offset by consolidation of the South African market (BevCo, a South African bottler which it acquired in March 2024) and fixed cost of new capex yet to the utilised to full potential, it added.

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Commenting on the outlook, VBL Chairman Ravi Jaipuria said: ‘India volumes grew 11.4 per cent, reflecting the strength of our distribution network and operational execution.’ While consolidated volumes increased by 23.2 per cent, largely led by new territories, revenues increased by 25 per cent and PAT by 25.3 per cent, he added.

In March 2024, VBL acquired The Beverage Company, South Africa along with its wholly-owned subsidiary BevCo.

“This acquisition allowed the company to consolidate its presence in franchised territories in South Africa, Lesotho and Eswatini, as well as territories with distribution rights in Namibia, Botswana, Mozambique and Madagascar,” it said.

Expansion of PepsiCo’s snacks franchise

On November 13, 2024, VBL entered into a share purchase agreement with Tanzania Bottling Company SA and SBC Beverages Ghana for the purchase of 100 per cent at an equity value of $154.50 million for Tanzania and $15.06 million for Ghana. Both are PepsiCo’s businesses.

‘The acquisition is expected to be completed on or before 28 February 2025 for Ghana and 31 March 2025 for Tanzania,’ said VBL.

Besides, Varun Beverages Morocco SA, a wholly-owned subsidiary of VBL, entered into an exclusive agreement to manufacture and package Cheetos in Morocco.

This is in addition to the existing distribution agreement for PepsiCo’s snacks portfolio consisting of Lays, Cheetos and Doritos in the territory of Morocco, it said.

Moreover, Varun Zimbabwe and Varun Zambia – entered an Exclusive Snacks Franchising Appointment with Premier Nutrition Trading LLC, Dubai which is a subsidiary of PepsiCo, to manufacture, distribute and sell ‘Simba Munchiez’ in Zimbabwe and Zambia.

‘Distribution in Zimbabwe and Zambia has started with effect from 1 Feb 2025. Manufacturing facilities are expected to be operational for Morocco on or before 1 May 2025, Zimbabwe on or before 1 October 2025 and for Zambia on or before 1 April 2026,’ it said.

In 2024, VBL commissioned three new greenfield production facilities in India at Supa (Maharashtra), Gorakhpur (Uttar Pradesh) and Khordha (Odisha) and one new greenfield production facility in Kinshasa, Congo.

VBL has already raised ₹7,500 crore in 2024 through QIP, and utilisation of proceeds is “primarily towards repayment of debt as well as acquisitions,” it added.

Over the outlook, Jaipuria said VBL remains focused on sustaining healthy growth in both Indian and international markets through deeper market penetration, capacity expansion and continued investments.

Meanwhile, in a separate filing, VBL said its board, in a meeting held on Monday, has recommended a final dividend of 50 paise per equity share ₹2 each for 2024.

Shares of Varun Beverages Ltd on Monday were trading at ₹538 apiece on BSE, down 2.89 per cent from the previous close.