Business Standard

FMCG volumes decline, but margins hold fort in third quarter

Analysts say as macroeconomic environment remains challenging, pressure on revenues will continue

Related News

 

The pressure on volumes most consumer product companies saw in the quarter ended September persisted in the three months ended December, too, as people cut spends. However, companies in this segment managed to sustain margins, thanks to lower input costs and a rise in prices.

 

While volume growth for fast-moving consumer goods major Limited (HUL) fell to five per cent in the quarter ended December, its operating margins rose 40 basis points, despite the company raising ad spends by 100 basis points. Total advertising and sales promotion expenditure for the December quarter stood at Rs 132 crore.

Though and reported nine per cent volume growth each in the quarter ended December, this was lower than what the two companies usually report. Typically, Ghaziabad-headquartered Dabur reports volume growth of about 10-11 per cent. Marico, which faced headwinds in its core brands Saffola and Parachute through the last few months, previously recorded growth of 8-12 per cent for the two brands.

 

 

faced challenges in its core category of soaps, in which it is ranked second after HUL (while Godrej’s share is 10-11 per cent, HUL has a share of about 45-46 per cent). In the last few quarters, the packaged foods segment faced pressure. In the quarter ended September, this spread to the personal products segment as well. In the third quarter, volume growth in the soaps category fell to about two per cent, indicating the broad-based slowdown trend.

 

 

While announcing HUL’s December quarter results, Chief Financial Officer said the 20 per cent growth in the soaps and detergents segment was primarily price-led. He, however, declined to give a break-up of the volume and prices in the category.

 

Analysts think as the macroeconomic environment remains challenging, consumer product companies would continue facing pressure on revenues.

In its monetary policy review on January 29, the Reserve Bank of India had lowered its forecast for growth in gross domestic product for 2012-13 from 5.8 per cent to 5.5 per cent. As headline inflation eased to 7.18 per cent in December, the central bank cut key policy rates by 25 basis points.

In December, food inflation rose to 11.2 per cent. Typically, food accounts for about half a household’s monthly expenditure. Harsh Mariwala, chairman and managing director, Marico, says for pressure on food to reduce, supply constraints would have to ease. Corporate honchos have said to kick-start growth, the central bank would have to be aggressive with its rate cuts.

Read more on:   
|
|
|
|
|
|

Read More

Oil PSU stocks draw foreign investors' interest

Foreign institutional investors (FIIs) are changing their outlook towards India’s oil and gas sector. Even before the government announced a partial ...

Advertisements

Quick Links

 

Market News

Maruti Suzuki India, Axis Bank joins Rs 1-lakh-cr market-cap club

Axis Bank hits a record high of Rs 440, while Maruti Suzuki touched a new high of Rs 3,349 in intra-day deals on BSE.

Marksans Pharma surges on strong Q2 results

The stock rallied 6% to Rs 64 on NSE after reporting 56% yoy growth in net profit at Rs 31 crore in September quarter.

Markets continue winning streak; Sensex up 400 points

The 30-share Sensex is up 412 points at 27,758 and the 50-share Nifty has gained 119 points to trade at 8,288.

Copper down 0.2% on weak global cues

Metal for delivery in November shed 0.14%

Silver down 0.6% on weak global trend

Weak trend trend overseas, eroding demand for the precious metals, pulled down silver prices

Back to Top