New Delhi: Indian agriculture chemical producer UPL Ltd has announced a decline of 42.6% in fourth-quarter profits due to increasing raw material costs. The herbicides and insecticides manufacturer’s net profit for the quarter ending on March 31 was 7.92 billion rupees ($96.88 million), down from 13.79 billion rupees in the previous year. Despite an increase of 4.5% in revenue from operations to 165.69 billion rupees, the company suffered an 11.2% rise in total expenses to 154.80 billion rupees, primarily due to a significant increase in the cost of materials, accounting for almost two-thirds of the expenses at 98.21 billion rupees. Latin American operations generated approximately 39% of the total revenue, with North America contributing 18.16%.
According to UPL, the quarter was negatively impacted by a rapid decline in product prices and delays in the planting season. The company also cited the decline in post-patent product prices with the ramp-up of supply from China and idle capacity costs as additional factors impacting the quarter. As of March 31, 2023, UPL’s net debt stood at $2.06 billion, exceeding the company’s guidance of $2 billion by 3%.
Although UPL’s shares have risen by 0.82% this year, they have underperformed compared to the benchmark Nifty 50’s gain of 0.96%. Earlier this year, the company announced the completion of a $200 million investment in agrochemical manufacturer UPL Sustainable Agri Solutions Ltd, which it intends to use to reduce its debt.