Get Instant Loan up to ₹10 Lakh!
Homegrown FMCG major Marico Ltd on Friday reported 15per cent increase in its consolidated net profit to ₹436 crore for the first quarter ended June 30,2024. The Harsh Mariwala-led company had posted a net profit of ₹377 crore in the April-June quarter a year ago, Marico said in a regulatory filing.
However, its revenue from operations slipped 3.16 per cent to ₹2,477 crore during the quarter under review from ₹2,558 crore a year ago.
The FMCG major said that gross margin expanded ahead of internal expectations, by 494 bps YoY and 257 bps sequentially, owing to incrementally softer input costs. A&P spends were up 7% YoY, as the Company maintained investments towards strategic brand building of core and new businesses. EBITDA margin was at 23.2%, up 253 bps YoY. EBITDA grew 9% and recurring PAT was up 12% on YoY basis. Reported PAT was up 15% YoY, due to a one-time gain (amounting to ~INR 14 cr. pre-tax) from the sale of fixed assets, classified under ‘Other Income’.
"Pricing drops in key domestic portfolios and currency headwinds in international markets subdue revenue growth," said Marico in its earnings presentation.
Its 85 per cent of the portfolio either sustains or gains market share and penetration on MAT (moving annual total) basis, it added.
Marico's -- which owns popular brands like Saffola, Parachute, Livon etc -- total expenses fell 5.78 per cent to ₹1,956 crore during the April-June quarter.
Its total income in the June quarter was also down 2 per cent at ₹2,523 crore.
The company's revenue from the domestic market was down 4.89 per cent at ₹1,827 crore in Q1 of FY2022-23. It was ₹1,921 crore a year ago.
However, Marico said, domestic business registered a volume growth of 3 per cent, though it was subdued by one-off channel inventory adjustments on account of - destocking by trade in Saffola Oils, owing to a sharp fall in vegetable oil prices and the last phase of trade scheme rationalisation in core categories, implemented by the company to correct the historical Q1 revenue skew.
"Domestic revenue was down 5 per cent on a year-on-year basis, owing to pricing interventions in key domestic portfolios last year and further pricing drops in Saffola Oils during the quarter under review," it said.
Among the sales channels, MT (modern trade) and e-commerce grew in double digits, while General Trade declined in mid-single digits.
Marico's revenue from the international business increased by 2 per cent to ₹650 crore against ₹637 crore a year ago.
"The International business continued its strong momentum and delivered constant currency growth of 9 per cent, amidst macroeconomic and currency devaluation headwinds in some of the geographies," Marico said.
During the quarter, the FMCG sector retained its positive sentiment from the preceding quarter, although clear green shoots in rural on a sequential basis, as anticipated, were not visible,Marico said in its earning statement
“Growth remained urban led, while rural consolidated on a lower base. From a category standpoint, Packaged Foods continued its good run, while Beauty and Personal Care largely mirrored the trajectory of rural growth. The progressive moderation in commodity and retail inflation continue to infuse optimism for a gradual recovery in volume growth, led by the rural sector,” it further said.
However, it will be critical to monitor the spatial distribution of rainfall and impact of recent erratic weather patterns on the agricultural cycle, and consequently, rural incomes.
The company in its near term outlook stated that while the performance of the domestic business in Q1 was marred by one-offs, it expect to resume an improving trajectory in volume growth in the near-term, given the sustained healthy trends in offtakes, market share and penetration across our key franchises. Rural recovery has been slower than expected, but factors such as moderating inflation, near-normal monsoons, MSP hikes and higher government spending keep us cautiously optimistic of more positivity in rural sentiment and a gradual recovery in volume growth for the sector in the coming quarters. We expect revenue growth to move into positive territory in H2, as pricing deflation in the domestic portfolio has bottomed out and will now taper off through the rest of the year.
The International business has been on a robust growth trajectory, despite macroeconomic headwinds in some of the geographies. We expect to maintain the double-digit growth momentum in FY24.
On a consolidated basis, gross margin is expected to expand by 250-300 bps, in view of input cost tailwinds, institutionalized cost management initiatives and a more favorable portfolio mix. While we will continue brandbuilding investments towards strengthening the equity of the core and new franchises, operating margin should improve by more than 150 bps to 20%+ levels in FY24.
Shares of Marico Ltd on Friday settled at ₹573.30 apiece on BSE, up 3.39 per cent from the previous close.
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.