Marico to post double digit growth in Q3

The FMCG company said the fast-moving consumer goods sector witnessed slowing consumption pattern.

Marico on Monday announced its operational business update for the quarter ended December 2021. The FMCG company said that the the quarter was characterised by slowing consumption patterns which affected the sector as a whole. Marico said slowdown in consumption was mainly due to continuing inflation impacting overall disposable incomes as well as rising mobility unleashing some degree of pent-up demand for discretionary goods, services and out-of home consumption.

In the India business, rural demand was sluggish, albeit optical to an extent, given the high base. Revenue growth in the quarter was in double digits, while volumes were flat, owing to the weaker consumption sentiment and a strong base. However, Marico clarified that on a two-year CAGR basis, volume growth was close to medium-term aspiration.

Parachute Coconut Oil had a muted quarter on a high base. Value Added Hair Oils posted softer growth in value terms in the quarter, but delivered double-digit value growth on a 2 year CAGR basis. The Saffola franchise grew in high teens in value terms, led by strong 20%+ growth in Foods, which is on course to reach the Rs 500 crore mark in revenues this year. Saffola Edible Oils volumes dropped, largely owing to higher in-home consumption in the base and weak trade sentiment due to fluctuating input prices. Premium Personal Care posted broad-based double-digit growth. Digital-first brands, Beardo and Just Herbs, were also in line with company's expectations.

Marico's International business delivered high teen constant currency growth on a healthy base. All markets fared positively, led by Bangladesh and a smart recovery in Vietnam. Hence the FMCG firn sees consolidated revenue growth in low teens.

Among key input costs, Marico said copra prices were range bound for most of the quarter before witnessing correction towards the end of the quarter. Edible oil prices also started softening, while crude oil prices remained firm. The company expects gross margin to improve sequentially, but remain lower on a year-on-year basis. Meanwhile, operating margin is expected to be near the levels of the preceding quarter.

The company 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.

Marico is a leading Indian group in consumer products in the global beauty and wellness space.

The company reported an 8% rise in consolidated net profit to Rs 309 crore on a 22% increase in revenue from operations to Rs 2,419 crore in Q2 FY22 over Q2 FY21.

Shares of Marico were trading 2.15% lower at Rs 503 in early trade on BSE.

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