Marico's Q4 numbers driven by robust volume growth

Strong performance in international business boosts consolidated margins despite cost push in India

Marico has bucked the slowdown trend plaguing some of its larger peers. The company's India and international revenues grew in double digits during the March quarter, despite lower spends on advertising and promotions.

The company’s India revenues grew 16.4 per cent year-on-year (y-o-y) to Rs 850 crore in the fourth quarter, while consolidated revenues expanded 7.4 per cent y-o-y to Rs 1,070 crore, driven by the 21 per cent growth in international sales. In constant currency terms, international sales grew eight per cent.

According to Emkay Global, revival in international operations has driven revenue and profit growth for the company. Bangladesh reported a top line growth of 22 per cent (in constant currency) during the quarter, led by 13 per cent volume growth. The MENA (Middle East and North Africa) region grew 27 per cent, led by a 30 per cent growth in Egypt. South-east Asia reported a 24 per cent decline as Marico's Vietnam operations were hit. South Africa reported an 11 per cent growth for the quarter.

Marico's key brands in India have fared well during the March quarter. The domestic business, too, has reported healthy growth - both by value and volume - across categories. Volumes in India grew 10 per cent during the quarter. According to analysts, Parachute volume growth during the quarter was 10 per cent compared to the corresponding quarter in the previous year. The company has taken steady price hikes as copra prices rose sharply. Volumes of Saffola also grew in double digits. Though Marico has taken calibrated price hikes, the sharp rise in copra prices have hurt gross margins and operating profit in the India business. During the March quarter, raw material costs increased 14.6 per cent y-o-y and 7.5 per cent sequentially. Despite a sharp spike in raw material prices, operating profit (consolidated) grew 28.2 per cent y-o-y to Rs 150 crore.

While operating margins in the domestic business declined 110 basis points (bps) to 13.5 per cent compared to last year, the firm's consolidated operating margins expanded 230 bps to 14.4 per cent. V Srinivasan of Angel Broking says: "The company's bottom line increased by 75 per cent y-o-y to Rs 89 crore, due to a 27.8 per cent increase in operating profit, driven by higher other income and lower interest costs." Marico has managed to expand margins by reducing employee and advertisement costs. The de-merger of Kaya business also helped the firm reduce its overhead costs.