Homegrown FMCG major Marico Ltd on Friday reported a 15.64 per cent rise in its consolidated net profit to Rs 436 crore for the first quarter ended June 2023, led by a one-time gain from the sale of fixed assets. The Harsh Mariwala-led company had posted a net profit of Rs 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 Rs 2,477 crore during the quarter under review from Rs 2,558 crore a year ago.
“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 Rs 1,956 crore during the April-June quarter.
Its total income in the June quarter was also down 2 per cent at Rs 2,523 crore.
“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. Growth remained urban led, while rural consolidated on a lower base,” said Marico in its earning statement.
From a category standpoint, packaged foods continued its good run, while beauty and personal care largely mirrored the trajectory of rural growth, it added.
“The progressive moderation in commodity and retail inflation continues to infuse optimism for a gradual recovery in volume growth, led by the rural sector. 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,” it said.
The company’s revenue from the domestic market was down 4.89 per cent at Rs 1,827 crore in Q1 of FY2022-23. It was Rs 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 Rs 650 crore against Rs 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.
Over the outlook, Marico said though business in Q1 was marred by one-offs, it expects 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,” Marico said, adding it expects revenue growth to move into positive territory in the second half of FY24.
On a consolidated basis, Marico expects gross margin to expand by 250-300 bps, helped by input cost tailwinds, cost management initiatives and a more favourable portfolio mix.
“While we will continue brand building investments towards strengthening the equity of the core and new franchises, operating margin should improve by more than 150 bps to over 20 per cent levels in FY24,” it said.
Shares of Marico Ltd on Friday settled at Rs 573.30 apiece on BSE, up 3.39 per cent from the previous close.
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