Godrej Consumer tumbles after weak Q4 update

Godrej Consumer Products slumped 7.25% to Rs 552.10 after the company in its March quarter update stated that it will report a revenue decline of high teens during the quarter.

Godrej Consumer announced after market hours on Thursday (9 April 2020) that Q4 quarter was an unprecendented period due to the spread of coronavirus pandemic across the globe, impacting all the geographies of the company's operations. There have been significant issues with manufacturing, transportation and distribution of essential items in the later part of March. The company said it expect the situation to gradually improve in the coming days, with manufacturing and distribution for essential items being restored, at reduced levels.

The company witnessed steady demand in its categories till mid March 2020. However, with the adherence to social distancing norms and the eventual lockdown in many geographies of the company's operations resulted in virtually no sales in the later part of March, significantly impacting sales performance in the quarter. In these tough times, the firm has also worked on launching hygiene products across geographies, some of which have been exceuted and the rest will get launched and scaled up in the near term.

 

In India, demand was steady till the outbreak of Coronavirus and slumped due to disruption of both back end and front end supply chain in the last twelve days of March. March also happens to be the start of the season for a few categories like soaps and household insecticides. Consequently, the company said it will report around high teens revenue decline in the quarter.

The firm said it saw low double digit sales decline in the performance of distributors, implying that their stock levels are getting depleted. The company is awaiting data on the stock levels on general trade shelves. The firm believes there should be a gradual bounce back in the near term driven by restoration of the supply chain, higher consumption for personal wash and an on going favourable season for household insecticides. The company continued to gain market shares across key categories of operations.

Meanwhile, the International business is expected to record around mid-single digit sales decline in rupee terms resulting in consolidated sales declining around low double digit in rupee terms for the quarter.

In Indonesia, the firm recorded close to mid single digit constant currency sales growths, inspite of disruptions caused by coranavirus. The country is following extreme social distancing practices as of now. In GAUM (Godrej Africa, USA, Middle East), the company recorded a decline in teens, in constant currency terms, amidst disruptions caused by coranavirus. Most of the big size markets are in lockdown or partial lockdown mode till mid April. Within the 'others' geographies, the performance in Latin America is expected to be steady in constant currency terms. However, in rupee terms the firm expects the performance to be muted. Performance in SAARC countries was steady.

Godrej Consumer Products is an Indian consumer goods company. The company's products include soap, hair colourants, toiletries and liquid detergents.

On a consolidated basis, the company's net profit rose 5.1% to Rs 445.20 crore on a 2.1% rise in net sales to Rs 2755.08 crore in Q3 December 2019 over Q3 December 2018.

In the past one month, the stock has added 9.21%, underperforming the S&P BSE Fast Moving Consumer Goods index which rose 17.25%.

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