GCPL net drops 45% on exceptional items

Godrej Consumer Products Limited (GCPL)’s net profit for the quarter ended June fell 45 per cent to Rs 130.46 crore. This was largely due to a one-time gain last year, which propped the net income of the company by Rs 140 crore. Last year, GCPL’s net profit stood at Rs 239.28 crore. Excluding exceptional items, GCPL’s net profit rose 31 per cent this quarter, said Chairman Adi Godrej.

Net sales rose 39 per cent to Rs 1,388.64 crore, against Rs 997.84 crore in the corresponding period last year. This was largely volume-led, driven by growth in soaps and household insecticides, Godrej said. Sales of soaps rose 42 per cent, while those of household insecticides rose 27 per cent.

However, the hair colour segment saw growth of only five per cent. Analysts say this is indicative of the general consumer sentiment.

Overall, the domestic business, which contributes 60 per cent to GCPL’s net profit, grew 23 per cent, while the international business grew 60 per cent, Godrej said.

The company is set to kick off the second phase of its acquisition of the Darling Group, which it began last year. In June 2011, Godrej announced it had acquired 51 per cent stake in Darling Group Holdings. However, since the company operated in 14 African markets, GCPL had said it would individually acquire the operations in these regions. In the first phase, it acquired the hair care major’s operations in South Africa, Nigeria and Mozambique. In the second phase, it would acquire the operations in Kenya, Uganda and Tanzania. The third phase would see GCPL acquiring operations in eight other markets.

Despite wrapping up about 10 acquisitions so far, Godrej said the firm would continue to focus on its three-by-three strategy, targeting the hair care, home care and personal wash segments in Asia, Africa and Latin America. In the domestic market, however, Godrej said the firm was open to categories beyond core ones. “We will look at categories in which we are not present, but within the larger ambit of personal care and home care,” he added.

Godrej declined to comment on speculation that GCPL was looking at categories such as oral care.