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Marico Q1 net up 21%

Marico Q1 net up 21%
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First Published: Thu, Jul 23 2009. 04 05 PM IST
Updated: Thu, Jul 23 2009. 04 05 PM IST
Mumbai: Marico Ltd posted a 21% rise in first quarter profit, a tad behind analysts’ expectations, and said it was “cautiously optimistic” on growth prospects in the near term, partly due to an uncertain monsoon.
The personal care products maker on Thursday reported a consolidated net profit of Rs559.73 million, up 21% from a year ago, while sales rose 17% to Rs6.97 billion in April-June.
The profit for the quarter was lower by Rs40 million on a one-time loss due to divestment of stake in former unit Sundari LLC to US’ Wellness Systems, Marico said in a statement.
A Reuters poll of brokerages had forecast consolidated net profit of Rs563 million on sales of Rs6.8 billion for the quarter.
The firm saw growth across mainline brands ‘Parachute’ hair oil and edible oil ‘Saffola’ which helped drive its topline.
Parachute, the focus of its hair oil portfolio, grew by over 13% in volume over last year while Saffola recorded similar growth after single-digit rise in previous quarters.
Its international FMCG business spanning Bangladesh, the Middle East and North Africa grew 63% on year.
But the firm said such volume growth will not be sutainable in coming quarters.
“Going forward, in Parachute 13-14% growth in volumes will not be sustainable in my view. You will see volume growth more in the 7-8% range,” Chaitanya Deshpande, Head of Mergers & Acquisitions and Investor Relations, told Reuters.
The firm’s coconut oil basket including Parachute and two other brands, Nihar and Oil of Malabar, has a market share of 55% in India.
Marico, which has so far remained unaffected by the uncertain monsoon in India said the failure of the monsoon may dampen buying sentiment.
“The company has been keeping a cautiously optimistic outlook on the near term,” the statement said, adding the firm has not yet experienced any slowdown in demand due to a poor monsoon.
“The whole issue of signs of a poor monsoon will not have any immediate impact but if you project the situation two or three quarters into the future you could have a little bit of a slowdown,” Deshpande said.
“For Marico as a company the impact will be a little lower as our portfolio has only 25% coming from the rural markets.”
He also said overall revenue growth for the FMCG industry will not be as high as last year as firms raised prices across many categories in the second quarter of last year leading to higher value growth and are unlikely to raise prices now.
Marico had cut prices of Saffola by an average of 10% across four variants in April and May.
“So, while you might continue to have 11-12% in terms of volume growth the value growth is also likely to be similar.
“You will not get too much growth out of pricing. It will be close to zero, because input prices have come down,” he added.
Prices of copra and safflower, its key inputs, fell by almost 19% and 14% respectively in the quarter.
Marico shares closed down 1.82% at Rs86.2 in a firm Mumbai market.
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First Published: Thu, Jul 23 2009. 04 05 PM IST