Bengaluru: Textile maker Arvind Ltd’s net consolidated profit rose 18.17% in the fourth quarter of 2017-18, mainly propelled by significant profit increases in its branded apparels business.
The company’s plan to demerge its branded apparels and engineering business segments is progressing as planned, it added in a filing with BSE on Wednesday.
Over half of the company’s revenue in the quarter came from the sales of its brands, which include names such as Arrow, Flying Machine, Calvin Klein, Tommy Hilfiger, Aeropostale and Gap. Profits before tax from this business division were also second only to the company’s textiles segment.
Arvind’s net profit rose to Rs115.47 crore from Rs97.71 crore in the January-March quarter on a year-ago basis. Revenue increased 20.19% to Rs3,004.11 crore from the same quarter in the previous year.
“The fourth quarter was a good quarter for our business with strong growth in both revenue and margins on the back of sharp improvement in our brands business profitability,” Jayesh Shah, chief financial officer of Arvind, said in a statement.
Profit before tax in the company’s branded apparels segment increased 37.69% to Rs3,199.80 crore during the quarter. In comparison, the textiles division earned Rs4,316.33 crore.
“During the quarter, we saw weak demand trends in the apparel industry, especially towards the beginning of the quarter. However, demand started picking up in March and we expect a similar growth trend to continue in the coming months,” Shah said.
In November, the company had said it plans to demerge and publicly list its branded apparel and engineering business divisions to focus better on its core textiles segment. That is progressing as expected and the three companies will be listed separately within the next four to five months, Arvind said on Wednesday.
The company’s core textiles division, which involves the sale of fabrics and garments, has had to deal with shorter term challenges because of a reduction in duty drawback rates and other export incentives. However, the medium-term outlook of this segment remains strong, it said.
Although the branded apparel business posted strong net revenue and profit growth, like-to-like growth (a measure of growth adjusted for divested and new businesses) was weak at around -4%, Arvind’s executives said on a conference call with analysts. This is because of an advancement in the end of season sales to December, which in turn led to weak growth rates in January and February, they added.
Still, the brands and retail business is expected to grow by 20-24% in FY19. During the same period, the textiles division will likely grow by around 10%, Arvind said in a presentation on its website.