United Breweries Reports 64% Profit Drop in Q2, Misses Estimates Amid Market Headwinds

United Breweries Ltd. announced a significant 64% year-on-year drop in its net profit for the second quarter ended September 30, 2025, reaching ₹46.95 crore compared to ₹132.2 crore in the same period last year. This figure fell short of the CNBC-TV18 poll estimate of ₹110 crore.

Revenue for the quarter was ₹2,051 crore, a slight 3% increase from ₹2,115 crore in Q2 FY25, but also missed the poll estimate of ₹2,156 crore. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) declined by 42.4% to ₹130.4 crore from ₹227 crore year-ago, and the EBITDA margin contracted to 6.4% from 10.7%, falling below the estimated 9.5%.

The company attributed these results to a stronger-than-usual monsoon and a generally muted beer market, which led to a 3% decrease in overall sell-in volume. However, United Breweries managed to gain market share on a sell-out basis, with its premium segment showing robust growth of 17%, driven by products like Kingfisher Ultra and Heineken® Silver.

Investments in branding increased by 22%, contributing to a 55% decline in Earnings Before Interest and Taxes (EBIT) due to operating deleverage from the volume decline. Capital expenditure (capex) during the quarter rose significantly to ₹293 crore, mainly for a new project in Uttar Pradesh and commercial growth initiatives.

Impact: This news is likely to negatively impact investor sentiment due to the substantial profit miss and lower-than-expected revenue and EBITDA. The challenges in the overall market, despite strong performance in the premium segment, highlight ongoing economic pressures. The company's strategic investments and optimism about long-term industry growth, however, could offer some counterbalancing view. Rating: 7/10

Difficult terms and their meanings: Net Profit: The profit remaining after all expenses and taxes have been deducted from total revenue. Revenue: The total amount of income generated by the sale of goods or services related to the company's primary operations. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance. EBITDA Margin: EBITDA divided by revenue, expressed as a percentage. It indicates the profitability of a company's core operations. Sell-out basis: Sales made by the company to its distributors or retailers. Sell-in volume: The volume of products shipped by the company to its distributors or retailers. Premium segment: A category of products that are priced higher than standard offerings, often associated with superior quality or brand image. Net sales: Gross sales minus returns, allowances, and discounts. Gross profit margin: Gross profit (revenue minus cost of goods sold) divided by revenue, expressed as a percentage. Basis points: A unit of measure used in finance to describe the percentage change in a financial instrument. One basis point is equal to 0.01% (1/100th of a percent). Operating deleverage: A situation where a company's operating costs do not decrease proportionally with its revenue, leading to a larger percentage decrease in profits when revenue falls. EBIT: Earnings Before Interest and Taxes. A measure of a firm's profit that includes all revenues and expenses except interest and income taxes. Capex: Capital Expenditure. Funds used by a company to acquire, upgrade, and maintain physical assets like property, buildings, or equipment. Greenfield project: A project involving the construction of a new facility from the ground up on undeveloped land.