Godrej Consumer expects high single-digit sales growth in Q2

The FMCG company on Tuesday (4 October 2022) said that in India, it expects to deliver high single-digit sales growth in Q2 FY23.

The Indian FMCG industry continued to remain soft during the quarter. Rural markets witnessed slower growth compared to urban. However, with the moderation in inflationary pressures due to correction in commodity prices, and the monsoon largely being on track (apart for a few states), we expect consumption to improve in the second half of the year. The company said it remained competitive given the relatively non-discretionary mass pricing of our portfolio.

In India, the company expects to deliver close to double-digit growth during the quarter and a mid-single-digit volume drop, with a low single-digit 3-year volume CAGR. Personal Care sustained its strong double-digit growth trajectory, while Home Care witnessed close to mid single-digit growth, the company stated.

In Indonesia, with hygiene performance waning after COVID-19 and a large hygiene comparator in the base, the company expects early double-digit constant currency sales decline. It also expects close to high single-digit sales growth (excluding hygiene).

In Godrej Africa, USA, and Middle East (GAUM), the firm continued its growth momentum across key countries and expected to deliver constant currency sales growth in the low-teens.

Further, the company is expecting constant currency sales growth in upwards of thirties in our Latin America business.

Godrej Consumer Products said, At a consolidated level, we continue to leverage our category and geographic portfolio. We expect to deliver higher than mid single-digit sales growth with a close to double-digit 3-year CAGR. We expect close to double digit sales growth ex Indonesia's Hygiene comparator.

On the profitability front, we expect a mid-teen decline in EBITDA. This is due to consumption of high cost materials, significant upfront marketing investments to drive category development, and a weak performance in Indonesia. However, with significant correction in commodities like palm oil derivatives and crude oil, we expect recovery in ~ I CONSUMER PRODUCTS consumption, gross margins expansion and upfront marketing investments in the upcoming quarters, the company added.

Godrej Consumer Products is an Indian consumer goods company. The company's products include soap, hair colorants, toiletries and liquid detergents.

The company reported a 16.7% fall in consolidated net profit to Rs 345 crore despite an 8% increase in net sales to Rs 3,094 crore in Q1 FY2023 over Q1 FY2022.

Shares of Godrej Consumer Products slipped 5.13% to Rs 850.35 on the BSE.

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