Voltas Profit Slides Sharply as Weak Cooling Demand and One-Time Charge Bite

India’s air-conditioner maker Voltas reported a sharper-than-expected decline in quarterly profit on Thursday, hit by weaker earnings from its cooling products business and a one-time charge linked to changes in India’s labour codes. Net profit fell 35.7% to 849.5 million rupees for the quarter ended December 31, compared with 1.32 billion rupees a year earlier, missing analysts’ estimates of about 1.29 billion rupees.

The company said a one-time charge of 264.9 million rupees related to the labour code revamp weighed on its bottom line. Overall revenue slipped 1.1% to 30.71 billion rupees, also below market expectations, as profit from its unitary cooling products segment declined despite largely stable revenue, hurt by seasonal factors and higher spending on sales and customer support in an increasingly competitive market.

Demand for room air conditioners remained weak during most of the quarter due to cooler weather and elevated dealer inventories, analysts said. Rival Blue Star also reported a steep profit fall, citing similar pressures from weak air-conditioner demand and labour-related charges, underscoring the challenges facing India’s cooling appliance makers.

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