Devaluation of Argentine Peso results in negative impact on Q3 sales: GCPL

FMCG maker Godrej Consumer Products Ltd (GCPL) on Friday said the devaluation of the Argentine Peso by the recently elected government in Argentina has resulted in a "negative mid-single digit impact" on its consolidated sales for the December quarter.

The new Argentinian government is taking various measures to improve the economic conditions and one of them was to devalue the Argentine Peso to the US Dollar.

In December 2023, the Argentine Peso to the US Dollar was devalued from 361 to 808, as the Argentinian economy is facing hyperinflationary pressures.

The IndAS 29 (Indian accounting standards) mandates the YTD statement of Profit and Loss to be translated at the closing rate for presentation in consolidated financial statements, said the Godrej Group FMCG arm in a regulatory statement.

It mandates all amounts to be restated into the measuring unit at the end of the reporting period by applying a general price index.

"Hence, the impact of the devaluation of the Argentine Peso of the financial statement for 9MFY24 has been recorded in the 3QFY24. This has resulted in a negative mid-single digit impact on consolidated sales performance in 3QFY24," it said.

The company is yet to announce its third quarter earnings for financial year 2023-24.

The profitability of the Latin America and SAARC business has been flat in the first half (April to September), hence, the overall impact of devaluation on profitability remains minimal.

The company has supported the action of the Argentine government and said: "We believe the larger actions being taken by the Argentinian government are progressive as they will aid economic growth in the long-run, thereby further improving consumption.

"These steps would also improve forex availability, easing economic activities in the country."

Last week, in its quarterly updates, GCPL said it expects to deliver a "mid-single digit volume growth" on a consolidated level.

In the domestic business, GCPL's organic business delivered steady underlying volume growth of mid-single digits.