Hatsun Agro sees dip in Q3 profit as input costs rise

India’s Hatsun Agro Product Ltd HAPL.NS, which sells Arun ice cream and Arokya milk, reported a 2.9% fall in quarterly profit on Thursday, hurt mainly by a surge in prices for animal feed and milk procurement.

The Chennai-based company said net profit dropped to 464.4 million rupees ($5.71 million) in the quarter ended Dec. 31, from 478.4 million rupees in the year-ago period.

While the quarter coincided with the October-February flush season when cattle naturally produce more milk, the prevalence of lumpy skin disease meant some of it went to waste.

Moreover, fodder prices went up due to a shortage as wheat and maize output fell, affecting most dairy farms in India.

Hatsun Agro’s raw material costs rose 15.6% to 12.03 billion rupees in the quarter and accounted for nearly three-fourths of total expenses.

The company was also hurt by the unexpected and prolonged rains in South India, from where it gets more than half of its revenue.

Its overall revenue rose 7.5% to 16.95 billion rupees in the latest quarter. However, that was slower than the 13.7% growth in the December quarter a year ago.

Nonetheless, price rises helped Hatsun Agro’s core profit margins expand to 11.21% from 10.59% a year ago. ($1 = 81.3450 Indian rupees)