InvestorQ : Why did Titan profits come under pressure in the September quarter?
indhumathi Sayani made post

Why did Titan profits come under pressure in the September quarter?

Answer
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shrinidhi Rajan answered.
10 months ago


It was actually a mix of high gold prices and weak jewellery demand that hit the second quarter performance of Titan. Total revenues of Titan were flat but that largely due to a 14% rise in gold prices. In volume terms, the sales were down. However, the PBT was down 3.7% as the sharply higher gold prices resulted in weak demand during the all important festival season. Even the growth in watches business fell to 6.4% from 20.4% in the June quarter. The company also took a higher loss on its dollar hedges during the quarter, worsening its profit situation.

The high gold prices hit its core jewellery business, which accounts for85% of overall sales as well and operating profits of the company. The tax outgo fell due to the company shifting to the new 22% tax formula offered by the finance minister in the September announcement. Titan ended up booking a hedging loss of Rs.120 crore, in the absence of which the performance could have been better on the profit front. In fact, had it not been for hedging losses, Titan would have reported a growth of 7% in retail jewellery sales in Q2.