Marico net profit dips 1.4% to Rs 126.30 cr
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Mumbai: Packaged consumer goods maker Marico Ltd on Wednesday reported a dip in its net profit for the quarter ended 30 September, on account of increased advertising and promotional expenses.
Stand-alone net profit dipped 1.4% to Rs.126.30 crore for the three months ending September from Rs.128.19 crore a year ago.
However, the increased expenses failed to lure consumers to spend more. Marico’s stand-alone net sales rose a meagre 2.9% to Rs.1,175.68 crore from Rs.1,142.54 crore in the same period a year ago.
“In the India business, we remain committed to deliver 8-10% volume growth in the medium term, although Q2 continued to face consumption headwinds. The international geographies are showing promise and signs of recovery,” said Saugata Gupta, managing director and chief executive officer, Marico.
Gupta added that he expects growth to be stronger in the second half of the financial year.
Revenue from the India business grew 4% to Rs.1,127 crore, while volumes in the domestic market grew 5.5% and were below the company’s expectation of 8-10%, Marico said in a press statement.
Hindustan Unilever Ltd, the country’s largest consumer goods company by sales, reported a volume growth of 6.5% during the second quarter of the fiscal year.
The growth in Marico’s India business was driven by the rigid bottle segment of coconut oil (11%) and the value-added hair oil portfolio (8%). The youth brands portfolio shrunk by 18% in value terms.
Marico’s rural and urban sales in the general trade segment grew by 3%. Sales in modern trade (9% of the domestic turnover) grew at 13% in the September quarter.
The company is closely watching the rural performance, given the subdued monsoon, it said in its press statement.
Growth in both urban and rural sales was also impacted by the shift in the festive season from the September quarter last year to the December quarter this year, the company said.
The turnover from Marico’s international business remained flat during the quarter at Rs.359 crore.
Consolidated results saw net profit grow 27% to Rs.150 crore from Rs.118 crore in the year-ago quarter.
Consolidated revenue from operations grew 4% in the September quarter to Rs.1,485 crore from Rs.1,431 crore last year.
“The results were below our expectations and disappointing on the sales and volumes growth fronts. The company has taken some measures, like price cuts and new launches. This should help growth in the second half,” said Naveen Trivedi, lead research analyst, Trust Research, an institutional brokerage house.
“The net profit was in line with our expectations. However, sales growth was below expectations,” said Gautam Duggad, vice-president, research (FMCG and retail) at Motilal Oswal Financial Services Ltd.
Separately, Marico announced that it has acquired a 45% stake in Bellezimo Professionale Products Pvt. Ltd, a company marketing skincare products to salons, for an undisclosed amount. It will pick up the remaining stake from Bellezimo’s shareholders in 2018.
Shares of Marico Ltd gained 2.16% to close at Rs.399.25 apiece on Wednesday on the BSE, while the benchmark index, Sensex, lost 0.14% to close at 26,552.92 points and the BSE FMCG Index gained 0.29% to close at 7,904.55 points.