Mumbai: Personal care products maker Marico Ltd on Wednesday posted a muted quarterly performance as absence of value growth hurt revenues but lower input costs aided margins.
The firm on Wednesday reported a consolidated net profit of Rs511.5 million from Rs444.1 million, a rise of 15% from the same period a year earlier, but saw its net sales jump a marginal 6% to Rs602 crore.
A Reuters poll of brokerages had forecast a rise of 30% in profits to Rs576 million and a 10% growth in sales to Rs617 crore.
“Sales growth was affected as input prices were lower and we passed on some of that benefits, particularly in the profitable segments, to consumers so that we can expand our franchise,” said Chaitanya Deshpande, head of M&A and investor relations.
“This resulted in a healthy volume growth but our value growth decelerated,” he added.
The firm enjoyed a volume growth of 14% but value growth fell by 8% in the quarter ended March.
Its flagship brands ‘Parachute’ coconut oil in rigid packs grew by over 10% whereas edible oil brand ‘Saffola’ rose 16% year-on-year.
The firm’s margin rise was aided by softer input costs in its key raw materials, Deshpande said.
“Copra prices were lower by an average of 20% whereas safflower prices fell by over 22% in the quarter,” he said.
The firm expects cost pressures from firming commodity prices and sees a room for price increases, which it will pass on to its customers.
“We haven’t taken a decision yet on prices, but input prices which were down by 20% this year’ will be up by 8-10% in FY11, so we will take our decisions depending on how the rise in prices goes,” Deshpande said.
Marico also expects its international business, which currently contributes 23% of its total revenues, to grow 20% per year for the next few years.
The firm is also looking for acquisitions in Africa and Asia in the haircare and skincare space, Deshpande said.
In the current fiscal, the firm plans to launch a prototype cooling oil under its brand Parachute and plans to expand its manufacturing facilities with a new edible oil refining plant.
“We are planning to set up a new edible oil refining plant in Himachal Pradesh at an investment of Rs70 crore this year,” Deshpande said.
The firm, which runs its skin care solutions business under the ‘Kaya’ brand, plans to roll out 3-4 clinics in west Asia, but does not have any expansion lined up for India, he added.
It recently wound up its healthcare and weight control solutions brand, Kaya Life, in a bid to focus on its core business.
The Kaya skin business posted a loss of Rs53 million for the fourth quarter on revenues of Rs450 million.
Shares of firm ended 0.22% down at Rs112.25 in a weak Mumbai market.