COVID-19: Marico says Q4 EBITDAmay see "modest decline"

FMCG major Marico said its January-March quarter EBITDA may see "modest decline" following disruptions on account of Covid-19 pandemic and associated lockdowns.

During the lockdown period, there was a spike in the sales of its cooking oil brand Saffola as people were stocking household items, but overall, it had a "low single-digit volume decline" in the domestic business, Marico said in a regulatory filing.

Though its India business had signs of "improvement across categories until early March", but it was offset by disruptions in the last 12 days in March, following lockdown in some states to contain the outbreak of Covid-19, Marico said.

"Revenue decline (both in India and International business), coupled with an unfavourable mix in the India business, will translate into a modest decline in earnings before interest, tax, depreciation and amortisation (EBITDA) in this quarter vs the corresponding quarter last year, Marico said.

According to the company, in such "unprecedented times" it has started an "aggressive cost management exercise" to mitigate the impact of reduced sales.

The company aims to drive sustained profitable volume-led growth over the medium term, through strengthening the franchise network in core categories, it said.

Marico would update the results for the quarter and financial year ended March 31, 2020, once it receives board approval.

"Overall, the India business posted a low single-digit volume decline in the quarter, with very skewed high growth in the Saffola portfolio," Marico said adding overall secondary growth in the quarter was in low single digits.

Moreover, during the quarter, traditional trade, which was already reeling under liquidity constraints, was further weakened.

Presently, production is currently suspended at Marico's other manufacturing units and shall commence once government approvals are received.

On distribution network, the company said it is "focusing on movement of essential food and grocery items to the consumers subject to necessary approvals from local government authorities and taking all possible efforts to ensure uninterrupted supplies of essential products to our customers across channels (General Trade, Modern Trade and ECommerce) within the existing constraints".

Marico's international business was also impacted due to the pandemic of Covid-19.

"With many of the territories experiencing partial or complete lockdown in March, the international business recorded a mid-single digit decline on a constant currency basis," it said.

India is presently going through an unprecedented complete lockdown of three weeks, ending on April 14, to prevent the spread of coronavirus.