Mumbai: Driven by growth in volumes, packaged consumer goods manufacturer Marico Ltd beat analyst expectations to record a 21% increase in net profit at Rs 84 crore for the third quarter ended 31 December. Revenue rose 29% to Rs 1,058 crore.
A Bloomberg poll had estimated net profit at Rs 82.8 crore and sales at Rs 992.25 crore.
A worker organizes bottles of Marico Ltd. coconut hair oil products at a department store in Mumbai. Photo: Bloomberg
“We had a wake-up call last quarter and have now delivered better growth than expected,” said Milind Sarwate, group chief financial officer, adding that the increase in volumes indicated that growth is intact.
In the June 2011 quarter, Marico’s consolidated net profit (after deducting minority interest) rose by just 9.4% year-on-year (y-o-y) to Rs 78.3 crore, slower than the 15.3% growth seen in the June 2010 quarter. The company had issued a note in mid-September to caution investors and analysts that profit for the next few quarters would fall short of expectations.
However, with inflation easing and gains from currency fluctuations, coupled with a decline in raw material costs of 400 basis points (bps) sequentially, the company was affected less than expected, it said in a statement. One basis point is a one-hundredth of a percentage point.
Marico’s shares rose 2.47% to Rs 153.4 at the close of trading on BSE on Thursday, while the benchmark Sensex gained 0.76% to 17,431.85 points.
Revenue growth was driven by a 16% rise in volume with Parachute coconut oil (in rigid packs) growing at 13%, Saffola oil at 15% and hair grooming oils at 20%.
Revenue increased across all three business units of Marico. The local consumer products business registered a growth of 38% in value and 16% in volume. Marico’s international business posted growth of 39% after foreign exchange fluctuations and business growth of 40%, boosted by the acquisition of 85% of International Consumer Products in Vietnam in February 2011.
The Kaya skin care chain’s collections on a same-store basis grew 15%.
“I am surprised by the saliency of Marico’s brands and how they have delivered double-digit volumes growth despite large value increase. For instance, Parachute is 40% more expensive today than a year ago but the brand has registered 13% volume growth,” said Anand Mour, analyst at banking and brokerage group Ambit Capital.
Marico’s operating profit margins, a measure of a company’s overall operating efficiency, shrunk to 11.51% from 12.19%.
Peers Dabur and Godrej Consumer Products Ltd witnessed a sharper decline in operating profit margins at 5.71% and 0.76%, respectively.
Colgate Palmolive India Ltd’s operating profit margin increased 5.91%.
sapna.a@livemint.com
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