Marico, Colgate see low volume growth; Nestle sales surge on lower base

Marico's volume sales grew 3.4% (in India); Colgate-Palmolive posted 4% growth

Two major fast-moving consumer goods (FMCG) companies lacked high volume growth during the July-September quarter.

Marico’s volume sales grew 3.4 per cent (in India). Colgate-Palmolive posted four per cent growth in its volume. Both, however, had double-digit rises in their profits. Marico’s net profit grew 18.1 per cent to Rs 180.6 crore from the same quarter last year. Colgate-Palmolive’s net went up by 15.6 per cent, to Rs 181.3 crore, aided by tax expenses being 12 per cent lower.

Nestle India’s consolidated net sales grew 35 per cent to Rs 2,346.2 crore from Rs 1,736.2 crore y-o-y. The firm’s last quarter numbers are not fully comparable with last year’s financial figures as during the September 2015 quarter one of its key products — Maggi Noodles which generates some 26 percent of Nestle’s sales — was absent from the market. According to the company, employee benefit cost, other expenses and tax expenses grew 15.6 percent, 34.6 percent and 130 percent, respectively, “largely to rebuild the Maggi noodles business” in September 2016 quarter.

During the quarter, Marico’s net sales fell by 0.9 per cent over a year to Rs 1,439 crore. Sales in India, 78 per cent of its revenue, went down three per cent. International business grew five per cent by value and four per cent by volume. However, the falling cost of materials consumed – down eight per cent to Rs 694 crore -- have helped its margins. Its operating profit margin grew 190 basis points (bps) to 16.1 per cent.

Colgate-Palmolive’s operating margin declined marginally, by 65 bps, to 20.2 per cent. Its raw material cost increased by 12.8 per cent during the quarter.  The firm’s board has appointed M S Jacob as finance head, replacing Godfrey Nthunzi, who'd resigned on October 6.

During the January-September 2016 period, Colgate-Palmolive continued to hold the leadership position in the toothpaste and toothbrush categories in the country, with volume market share at 55.7 per cent and 46.6 per cent, respectively, Edelweiss Securities reported.

Continued slowing in the rural market impacted Marico’s volume growth. Volumes fell four per cent here, compared to a fall of one per cent in urban areas. Modern trade channels, nine per cent of total sales, grew eight percent. Sale of Parachute (rigid), one of its key brands, shrank six per cent with a price increase.

“Our growth in the quarter was muted. The profitability indicators, however, continue to be robust. The macro environment in India and the Middle East continues to be sluggish. We believe the soft consumption environment has bottomed out and performance will pick up steadily,” said Saugata Gupta, managing director and chief marketing officer.