Amira Nature Foods Ltd (NYSE:ANFI) has said it had a difficult time in the six months ended September 2015 to somewhat try to explain away sharp declines in revenue and earnings. The bulk of the burden that Amira faced in the six-month trading period came from international operations.
Amira Nature Foods Ltd (NYSE:ANFI) said that Indian business contributed 52.9% of revenue in the two quarters to September up from 39.7% in the same period a year earlier. International business generated 47.1% of sales, sharply down from 60.3% in a similar period in the prior year.
Six months to September 2015 financials
Amira’s revenue in the two quarters ended September 2015 fell 15.3% YoY to $231.7 million. The slip in headline numbers pulled with it other performance metrics. For example, adjusted EBITDA fell to $30.5 million from $38.8 million and adjusted profit after tax declined to $13.5 million from $19.8 million. With that, the company posted EPS of $0.38 as opposed to $0.55 in a similar period a year earlier.
What went wrong with Amira Nature Foods Ltd?
Amira Nature Foods Ltd (NYSE:ANFI) blamed several unfavorable developments during the two quarters for the poor financial results. The company said that pricing pressure, currency headwinds and litigations impacted performance in the two quarters but added that it hoped most of the challenges are short-term and will fade away.
Performance in India
India was the bright spot for Amira during the six months to September 2015. Indian sales rose 10.3% to $122.6 million in U.S. dollar terms, but were up 17.4% when measured in Indian rupees.
Gains in India were driven by higher volume sales, but lower prices offset the gains. The stark difference between dollar-measured and rupee-measured sales growth was due to unfavorable currency translation terms. When the U.S. dollar is stronger, international sales are worth less when converted.
Lower volume sales hurt Amira Nature Foods Ltd (NYSE:ANFI)’s international performance. In the six months to September 2015 International sales fell 35.4% to $109.1 million compared to a year ago period. Besides lower volumes, pricing pressure and business disruption that distracted management execution also hurt international business.