UFlex Announces Q3 FY 2024 Results

UFlex Limited, India’s largest multinational flexible packaging and solutions company, reported Q3 FY24 unaudited consolidated net revenue of Rs. 33,454 million ($4.03 billion), down 1.3% QoQ and 4.3% YoY, for the first nine months of FY 2024. Consolidated adjusted EBITDA stood at Rs. 4,258 million ($512 million), down 0.4% QoQ and up by 4.3% YoY. EBITDA margin is 12.7%, up by 70 BPS QoQ and 50 BPS YoY.

Q3 FY24 maintained steady growth in volume and profitability at $2 billion. The company posted a healthy performance with improvement in the sales volume and operating profitability in the third quarter of the current fiscal 2024. The overall sales volume grew by 5.8% YoY, including volume growth of 6.5% and 3.6% YoY in the films and packaging business, respectively.

Liquid packaging drove the growth of the packaging business. Consolidated adjusted EBITDA margin improved by 50bps YoY and 70bps QoQ to 12.7%. The overall demand in the industry was impacted by oversupply and pricing pressure in the packaging film business, which is expected to persist in the near to medium term.

UFlex witnessed the impact of global geopolitical uncertainties, including the Red Sea conflict, Israel-Palestine and Russia-Ukraine war, and continued devaluation in emerging market currencies, including Egypt and Nigeria, which are the relevant markets of UFlex for its packaging films business.

Higher interest yield and tighter monetary policies of the central banks across the world resulted in tepid consumer sentiments. The ongoing Red Sea conflict has disrupted the global supply chains. The voyage time has increased considerably, and the impact could be seen in higher costs, including higher freight and insurance provisions.

On the back of robust GDP growth, UFlex’s business in India and the Americas region continued to deliver solid performance. Europe’s underperformance continued in the third quarter due to weak economic conditions, tighter monetary measures, higher borrowings, and high energy costs. In India, the economy remained strong although the prevailing overcapacity in the packaging film industry impacted the margins.

“Q3 witnessed an improvement in the sales volumes on a year-on-year basis both for the packaging films and packaging businesses,” Ashok Chaturvedi, chairman and managing director, UFlex Group, said. “The consolidated adjusted EBITDA (excluding loss on account of currency devaluation and derivatives) stood at Rs. 4,258 million.

“We have commenced trial runs of our PET chips resin manufacturing facility for BOPET films at Panipat and expect the entire facility to be commissioned in the current quarter,” added Chaturvedi. “We are confident about our long-term value creation strategy and are strongly positioned in our markets. The supply chain disruptions coupled with the escalating shipping costs caused by the Red Sea crisis has once again brought to the forefront the advantages of onshore manufacturing and reliability for our customers.”

“I am delighted to share that we have seen a sustained rise in sales volumes over the last two quarters and a moderate expansion in margin,” added Rajesh Bhatia, group CFO, UFlex. “We have seen encouraging signs of strong demand in our end markets in the Americas, India, and Nigeria. India continues to deliver strong performance with volume traction in packaging films and value-added products (VAP). We expect improvement in our performance with the integration of a post-consumer recycled (PCR) PET chips plant in Egypt and the commissioning of a PET chips plant at Panipat in Q4, FY24. The currency markets in Nigeria and Egypt are expected to remain a matter of concern.”