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Business News/ Companies / Marico beats Street, net profit rises 46%
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Marico beats Street, net profit rises 46%

Marico beats Street, net profit rises 46%

Packages of Marico Ltd. products at a department store in Mumbai. MumbaiPremium

Packages of Marico Ltd. products at a department store in Mumbai. Mumbai

Mumbai: Packaged consumer goods manufacturerMarico Ltdbeat analysts’ estimates with a 46% jump in net profit to 123.83 crore for the quarter ended 30 June, but warned a likely drought this year may slow business.

A Bloomberg poll had estimated the company’s consolidated net profit at 115 crore.

Revenue for the maker of Saffolaand Parachuteoil increased 23.3% to 1,284.83 crore, with sales volume growing 14% and average prices of its products rising 8%.

Packages of Marico Ltd. products at a department store in Mumbai. Mumbai

“Going forward, the drought could fuel inflation and we could see a slowdown. Also, our volumes could be squeezed as prices of copra come down and competition increases," he added.

Marico fell nearly 3% to 188.70 on BSE on Friday, while the Sensex ended nearly unchanged at 17,197.93 points.

In the June quarter, growth for Marico came from its three business units. The Indian consumer products business grew 23% in value and 16% in volume terms. Its international business grew 17%, of which 14% came on account of the rupee’s depreciation against the dollar.

Marico’s Bangladesh business, which accounts for 40% of global revenue, shrunk 2% due to high inflation and currency depreciation against the dollar.

Its Kaya skincare business grew 29%, led by same-store sales growth of 12% in India and West Asia put together. Same-store sales is retail parlance for measuring growth of stores that have been in operation for at least a year versus growth on account of new stores.

“Our Kaya positioning of cure and care, which enables us to provide maintenance and enhancement services, is working for us. However, we will need to be watchful for the next few quarters," said Deshpande.

“This has been a dream quarter for the firm, well ahead of our expectations," said Abneesh Roy, associate director, institutional equities, research, Edelweiss Securities Ltd, while explaining that Marico benefited on account of falling copra prices, a key input in its Parachute oil. Copra prices, which account for close to 40% of input costs for Marico, fell 38% over the year-ago quarter.

As the firm increased its rural presence by adding 100,000 outlets in the past two years to increase its overall reach to 850,000 stores, rural sales grew 26% in the June quarter, faster than the 18% growth in the cities.

Marico’s consolidated operating profit margin in April-June rose to 14.58% from 12.01% in the year-ago quarter, ahead of some of its peers. For instance,Dabur India Ltd, the maker of Vatika oil and Hajmola candies, reported a decline in operating profit margins for the quarter to 14.27% from 14.45% earlier.

During the quarter, Marico concluded the acquisition of the personal care business of Paras Pharmaceuticals Ltdfrom Reckitt Benckiser (India) Ltd, called Halite Personal Care India Pvt. Ltd, for 745.6 crore. The Halite business is housed under Marico’s newly created subsidiary Marico Consumer Care Ltd (MCCL).

The consolidated earnings of Marico for the quarter ended June include the financial results of MCCL, which got added from the last 10 days of June and accounted for 10 crore in the total revenue figure. The Halite business had a full-year revenue of 150 crore at Reckitt Benckiser at the time of the acquisition. “We expect to grow this business by 45%," said Deshpande.

sapna.a@livemint.com

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Published: 04 Aug 2012, 12:49 AM IST
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