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H1 Sales Growth: 1.6% increase to ?307 crores.
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Branding Spend: Increased to 4.1% of revenue.
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Gross Margin Q2: 25.7%, a 2.7% improvement from last year.
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EBITDA Q2: 6.2%, higher by 2.5% compared to last year.
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Net Debt: ?35 crores.
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Cash Conversion Cycle Q2: Close to 33 days.
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Distribution Expansion: Added net 19 outlets, total active count at 380.
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OBT Revenue Contribution: 46% of revenue, up from 42% last year.
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Cost of Production H1: Approximately 5.5% lower than last year.
Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Orient Bell Ltd (BOM:530365) reported a 1.6% increase in H1 sales, reaching ?307 crores, despite challenging market conditions.
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The company has increased its branding spend to 4.1% of revenue, supporting a TV campaign that has been running for the past 10 months, which has led to a 70% increase in website traffic.
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Product mix improvements have been significant, with DVD sales improving to 40%, a 14% increase over the previous year.
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The company has expanded its distribution network, adding 19 new OBTs in the last six months, contributing to 46% of revenue compared to 42% last year.
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Cost management strategies have been effective, with a 5.5% reduction in the cost of production compared to last year, leading to improved gross margins.
Negative Points
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Domestic demand conditions remained unchanged, and exports were impacted by ocean trade volatility, affecting overall performance.
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Monthly run rates moderated to ?200-?2000 crores, down from ?1500-?2000 crores last year, impacting pricing and volume buildup.
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The first half of the fiscal year was below expectations on the revenue front due to the demand-supply situation.
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Capacity utilizations at the Dora plant are not at optimum levels, indicating a need for increased production to meet market demands.
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The export market has been underperforming, with the last three to four months being particularly challenging, affecting the company's export strategy.
Q & A Highlights
Q: Can you provide the volume figures for the quarter? A: As a strategy, we will share volume data annually. We only sell tiles, unlike our diversified peers, so our top line reflects only tile sales. Sharing too much detail publicly can be counterproductive to our interests.
Q: How is the new 5.5 MSM capacity from Proton being utilized? A: The Proton capacity started in Q2, but for practical purposes, we assume it will ramp up in Q3. This capacity is primarily for exports, and we expect it to ramp up over the next six months to a year.