Symphony

Symphony reported a 30% growth in consolidated revenues and a 12% growth in net profit at Rs.166 crore for FY17. But for the first time in 5 years, the company reported a fall in its quarterly net profit – Q4Fy17 net profit was down 16% (YoY) at Rs.47 crore despite a 33% rise in revenue at Rs.184 crore.

The reason for this are two – firstly, its gargantuan spend on advertising – its spent Rs.13 crore in Q4 v/s Rs.1.5 crore in Q3 and Rs.2 crore in previous Q4. This surge is on account of its ongoing brand building exercise which is expected to extend well into current Q1 too.

The second reason is that it launched two new products at introductory or discounted prices. The response was extremely – which we see in the increased sales but due to the lower prices, this did not get translated into profits.

The company has stated that the moderate slowdown in profit growth will extend into the first quarter of 2017-18 as sales have been better than expected of select models at introductory prices that cannot be changed in-season. The summer was good in March and the first two weeks of April, but thereafter proved benign as a result due to which Q1 does not seem promising as of now. The company hopes to reap benefits of this brand building exercise from Q2FY18 onwards.

Its acquisition in Mexico, IMPCO has turned around. It has already fully repaid the internal loans advanced by Symphony along with interest, and is debt-free. Its Chinese unit though is still to turnaround and could take a year or two more to deliver profits to the consolidated numbers. The company today has 70 brands of air coolers and enjoys a 50% market share.