Marico expects June quarter revenue drop on sluggish rural demand

BENGALURU/CHENNAI (Reuters) - India's Marico said on Wednesday its consolidated revenue for the June quarter fell in the low-single digits percentage range, dragged by sluggish sales in rural markets and a move to cut prices of its Saffola edible oil.

"Signs of improvement on a sequential basis were not clearly visible ... the anticipated pickup in rural demand remained elusive," Marico said in a statement.

Marico saw sales rise 1.3% in the same quarter last year. The quarterly drop for the three months ended June 30 would be the company's first in three years, according to Refinitiv data.

Rural consumers typically make up about two-thirds of consumer goods makers' sales, according to Bengaluru, Karnataka-based Bizom, which tracks retail industry trends.

Consumer goods companies' sales in the hinterlands - where buyers have been the worst affected by higher prices of everyday essentials - are often seen as a gauge of the country's economic recovery by investors and analysts.

Marico said sales volumes in its Parachute coconut oil business dropped, even as Saffola reported double-digit growth helped by price cuts that made its cooking oil nearly 30% cheaper from a year earlier.

However, Marico still said its gross margin would expand "materially" and that bottom line would grow in the double-digit percentage range on the back of reduced costs of various raw materials, prompting "a visible pickup from the coming quarter."

Shares closed 2.3% higher on Wednesday.

Earlier on Wednesday, peer Godrej Consumer Products estimated its sales increased in the double-digit percentage range in the June quarter, led by strong demand for its home care and personal care products.

 

(Reporting by Aleef Jahan in Bengaluru and Praveen Paramasivam in Chennai; Editing by Savio D'Souza and Nivedita Bhattacharjee)