India’s largest spirits company United Spirits Ltd, the local arm of Britain’s Diageo Plc, swung to profit in its fiscal second quarter helped by a one-off gain from a share sale, which also helped it reduce its debt.
In July, United Spirits, in which Diageo acquired a stake in 2012 and later gained management control, sold its 8.5 million shares in brewer United Breweries for 8.7 billion rupees ($133 million).
Both United Spirits and United Breweries were previously owned by Indian liquor baron Vijay Mallya.
The share sale helped United Spirits earn 9.3 billion rupees in net profit in the quarter ended September 30, compared to a loss of 269 million rupees a year earlier. Net sales grew 5.7% in the quarter, to 21.22 billion rupees.
Proceeds from the share sale were also one of the factors in a reduction of debt to about 39.99 billion rupees during the six months to September, down from 53.23 billion rupees a year earlier, United Spirits said on Monday.
United Spirits posted 7% volume growth in its high-end brands in the first six months ended on September 30 from a year earlier, compared to a drop of 5% in its mass brands in the same period, the company statement said.
The company plans to scale back its roster of more than 150 brands and focus on the faster-growing top end, its CEO Anand Kripalu told Reuters last week, hoping to boost its fortunes in a market dominated by cheaper, local names.
United Spirits has 39% of the Indian spirits market and India is Diageo’s second-largest market by sales.
The spirits market in Asia’s third-largest economy was worth about $17 billion in 2014, and per capita consumption is expected to grow to 1.8 litres in 2019 from 1.4 litres in 2010, according to research firm Euromonitor.