UPL Ltd, an agro-chemical firm, has reported a net loss of Rs 189 crore for the second quarter of the 2023-24 fiscal year. This decline in revenue can be attributed to global “channel destocking.” In the same quarter last year, the company had recorded a net profit of Rs 814 crore. The total income for the quarter under review was Rs 10,170 crore, compared to Rs 12,507 crore in the previous year.
According to the regulatory filing, the company’s revenue from its operations in India was Rs 1,387 crore during the quarter, compared to Rs 1,809 crore in the year-ago period. CEO Mike Frank of UPL Corporation Ltd stated, “The global agrochemical industry continues to face challenges, with prices falling significantly compared to the previous year due to high channel inventory levels and intense price competition.” He explained that distributors focused on destocking, purchasing at lower prices to reduce average inventory costs. This destocking had a notable impact in the US and Brazil.
Frank expressed optimism for improved performance in the second half of the fiscal year. Key regions like North America, Latin America, and Europe are entering their major cropping seasons, and the elevated inventory levels are expected to gradually decrease as farm gate demand remains strong. The situation is already normalizing in Europe, Asia, and Latin America (excluding Brazil), while North America and Brazil show gradual improvement.
Regarding pricing, Frank noted that most post-patent molecule prices seem to have reached their lowest point in the second quarter and are now stabilizing. He added, “Overall, we are navigating this challenging market well and implementing changes to our operating model that will further enhance our business as the cycle normalizes.”
On the stock market front, UPL Ltd’s shares settled at Rs 538.40 apiece, representing a 3.64% decrease on the BSE.
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