CCL products bullish on growth despite rising coffee prices

CCL Products (India) Ltd. expects to maintain its growth momentum even as green coffee prices increase globally due to supply chains disrupted by the pandemic.

The Continental Coffee maker‘s revenue growth is partly due to price hikes to offset higher input prices, Challa Srishant, chief executive of CCL Products, told BloombergQuint’s Niraj Shah. Srishant, however, expects volume growth to hold or even show “slight improvement” in the fourth quarter ending March.

Third Quarter FY22 (Annual) Highlights

  • Revenue growth of 43% on an annual basis.

  • Ebitda margin decreased by 136 basis points.

  • Improved demand with 18% YoY growth in exports via India in CY21.

Green coffee prices are at decade highs, but CCL Products does not expect this to impact profitability as it has “consecutive commodity contracts”, Srishant said.

Several factors led to the high inflation, including supply disruptions, a damaged coffee crop in Brazil, and increased demand. According to Srishant, while the Arabica crop has suffered, the supply of Robusta coffee continues to be “normal and strong”, and he does not expect the shortage to drive up prices.

While Srishant refrained from giving an exact outlook, he said the company stands by its goal of doubling revenue and profit in four years.

Capacity expansion

CCL Products is also confident about volume growth, helped by capacity additions. The company has already started trial production from a sinter facility in India. And the 3,500 metric tons of increased capacity of the Vietnam unit was commissioned in the last quarter.

The Vietnam unit is expected to double capacity from the third quarter of FY23, and the outlook for volume growth through FY24 is strong, Srishant said.

About Glenda Wait

Check Also

With nearly double the number of McDonald’s locations in Ohio, it’s the most common fast food chain in the state – 614NOW

While Golden Arches comes to mind for many as the Buckeye State’s most prolific fast …