Marico sees revenue growth in second quarter in 'low twenties'

With reducing COVID-19 cases and accelerated vaccination drive leading to increased mobility levels driving up demand trends, FMCG major Marico on Tuesday said its revenue growth in the quarter ended September 30, 2021, was in "the low twenties".

In a regulatory filing sharing update on the overall summary of the operating performance and demand trends witnessed in the quarter, Marico said it witnessed healthy consumer sentiment across categories in its India business.

"During the quarter, the sector witnessed improving demand trends as mobility levels increased with reducing COVID-19 infections and accelerated vaccination drives. Discretionary categories and out-of-home consumption also visibly picked up," the company said.

The company further said, "Revenue growth in the quarter was in the low twenties, with volume growth close to double-digits on a 2-year CAGR (compound annual growth rate) basis."

While the 'Parachute' coconut oil delivered in line with medium-term aspirations, the company said its value-added hair oils posted double-digit volume growth.

"Within the Saffola franchise, Saffola edible oils had a muted quarter, largely due to volatility in edible oil prices leading to trade destocking and partly owing to lower in-home consumption," it added.

On the other hand, Marico said its foods business continued to "grow smartly" and remained on course to clock Rs 500 crore in revenues this year.

Premium personal care portfolios grew "handsomely, albeit on a low base", it said adding, "the digital-first brands, Beardo and Just Herbs, performed in line with expectations".

On the international business front, the company said it delivered double-digit constant currency growth as it witnessed positive trends in all markets, except Vietnam, where a large part of its portfolio is of a discretionary nature, was "in the grip of a severe COVID-19 surge and stringent lockdown restrictions".

The company said among key inputs, copra prices corrected further, crude remained firm, while edible oil prices oscillated at higher levels.

On the outlook, it said gross margin is expected to improve marginally from the previous quarter but will be under pressure on a year-on-year basis due to much higher input costs over the last year.

"Operating margin is also expected to contract on a year on year basis given the arithmetic effect of significant pricing growth in the topline. As a result, the company expects modest bottom-line growth in the quarter," it added.

Nevertheless, the company said it "maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term, enabled by the strengthening brand equity of its core franchises and new engines of growth reaching critical mass".