Mumbai: Packaged consumer goods company Marico Ltd reported a 21% jump in net profit to Rs. 104.5 crore for the quarter ended 31 December, benefiting from a one-time gain yet falling short of expectations because of slowing sales.
Excluding the gain, profit grew 12%.
Sales of Marico’s flagship Saffola and Parachute oil during the October-December quarter disappointed due to competition from lower-priced regional and domestic brands but the company was compensated to some extent by the personal care business it acquired last year.
Overall, revenue increased 11% from a year ago to Rs.1,168 crore, Marico said in a statement on Friday.
Analysts had estimated consolidated net profit at Rs.105.2 crore and net sales at Rs.1,250 crore, according to a Bloomberg survey.
Revenue at Marico’s domestic consumer business increased 16% to Rs.828 crore, about 90% of which came from the personal care business of Paras Pharmaceuticals Ltd that Marico acquired from Reckitt Benckiser (India) Ltd in February last year.
The Paras business includes the Set Wet, Zatak and Livon deodorant and hair care brands, which saw sales grow 18% to Rs.43 crore in the December quarter.
“The volume growth in the domestic consumer business was a little disappointing as the large brands like Saffola and Parachute have slowed down,” said Amrita Basu, analyst, institutional equities, Kotak Securities Ltd.
Hindustan Unilever Ltd, the country’s largest packaged consumer products company with top brands like Surf, Lux and Kissan, too saw volume growth drop to 5% in the December quarter from 7% in the trailing three months and 10% in the March quarter.
Marico, which participates in the Rs.2,500 crore branded coconut oil market through its Parachute and Nihar brands, saw volume growth for Parachute at 6%, lower than the norm of 8-10% growth. Volume growth for Saffola dropped to 5% from the usual double-digit growth the brand registers.
“We have taken corrective actions in Saffola and Parachute and expect the volume growth to return in the coming quarter,” said Chaitanya Deshpande, executive vice-president and head investor relations and mergers and acquisitions, Marico. The company has reduced the prices of both the brands by 5-8%, he added.
Marico’s international business, which contributes 24% to the overall revenue, reported a flat performance for the December quarter due to labour strikes at its factory in Bangladesh and the restructuring of its distribution network in West Asia.
“We are hopeful these markets will return to normal by the first quarter of the financial year 2014,” Deshpande said.
Marico’s skin care and services retail chain Kaya Skin Clinic posted a revenue growth of 5%. During the reporting quarter, the company decided to hive off this division into a separate listed entity and is waiting necessary approvals.
In the December quarter, Marico expanded its Saffola Oats and Saffola Muesli offerings nationally. “We have delivered a healthy topline growth accompanied by an expansion in margin,” said Saugata Gupta, chief executive officer, consumer products business, Marico. “Our continued investments in our brands are expected to show results by way of volume growths in established brands and scaling our new product initiatives successfully.”
Marico’s stock closed up 1.21% at Rs.230.10 a piece on BSE on Friday. The Sensex ended down 0.57% to close at 19,781.19 points.