Akzo Nobel India $AKZOINDIA.NS, a renowned paint manufacturer under the Dulux brand, has reported a decline in profits for the third quarter due to increasing expenses. Despite a rise in operating revenue, the company faced a significant hike in raw material costs and a decrease in consolidated net profit.

For the fiscal period of October to December, Akzo Nobel India reported a 5% drop in consolidated net profit, amounting to 1.09 billion rupees, or approximately $12.47 million USD. The company's operating revenue rose by 2%, reaching 10.51 billion rupees. However, this growth rate was lower compared to the previous quarter, which saw a 3% increase in revenue.

Challenges in the Context of Rising Costs

A major challenge for the company is the 11% rise in raw material costs, resulting in a 2.3% increase in total expenses, up to 9.10 billion rupees. This adversely affected earnings before interest and taxes (EBIT), which declined by 2%, contrasting with a 3% rise noted in the second quarter.

1. Decreased Demand for Premium Products. Consumers are opting for cheaper alternatives due to high inflation pressures, affecting print products manufacturers.

2. Industry Outlook. Demand forecasts have been uncertain in the painting sector.

3. Competitive Landscape. Asian Paints (ASPN.NS) has disappointed investors with their outlook, whereas Kansai Nerolac $KANSAINER.NS noted profit growth driven by increased demand in the automotive sector.

Among other significant factors, upcoming reports from Grasim Industries $GRASIM.NS and Berger Paints $BERGEPAINT.NS are highly anticipated, as they plan to release their results next week. Kansai Nerolac remains optimistic about demand improvement, thanks to a government-led program aimed at boosting domestic consumption.