Godrej Consumer eyes double-digit domestic sales growth in Q1 of FY23

Godrej Consumer, however, expects a mid-single-digit volume drop on a high base in the quarter

Godrej Consumer Products expects to deliver double-digit sales growth in its India business despite a high base in the year ago quarter, the company said in its quarterly update ahead of announcing its results for the April-June quarter.

However, it sees volume growth dropping to mid-single digits due to a high base in the quarter. On a three-year CAGR (compounded annual growth rate) basis, it said its sales are in early double digits and volume is in mid-single digits.

“We witnessed a mixed performance in our personal care and home care categories,” the maker of Control soaps said in its update.

The firm's personal care sustained a strong double-digit growth trajectory during the quarter, with a two-year CAGR in double digits, led by personal wash and hair colours.

In the home care segment, the company saw a single-digit sales drop on a high base, but its two-year CAGR remained at a high single digit figure.

The Indian FMCG industry continued to remain soft during the quarter. The sector continued to be hit hard by inflation levels due to geopolitical tensions, leading to price increases which in turn impacted volumes. “Rural markets witnessed slower growth compared to urban,” the update said. However, the company said that the recent correction in commodity prices and the forecast of a good monsoon are encouraging. “We remain competitive given the relatively non-discretionary mass pricing of our portfolio,” it added.

On a consolidated level, the company will continue to leverage its category and geographic portfolio. “We expect to deliver high single-digit sales growth and a 3-year CAGR in double-digit,” it said.

On its profitability, the company expects lower EBITDA (earnings before interest, depreciation, tax and amortisation) margins during the quarter due to input inflation, upfront marketing investments to drive category development and weak performance in Indonesia.

“However, with inflationary pressures abating and significant correction in palm oil derivatives and crude oil, which are some of our key raw materials, we do expect recovery in consumption and gross margins in the upcoming quarters,” Godrej Consumer said in its update.

In Indonesia, the company expects a high single-digit sales decline due to a high base in hygiene coupled with demand waning for the category after Covid. Excluding hygiene the company’s sales performance in the country was largely flat.

the company reduced stocks with channel partners which resulted in sales growth on sell-outs excluding hygiene in the quarter ended June. In Africa, the US and Middle East, the company continued its growth momentum across most of its key countries of operations. “We expect to deliver double-digit sales growth, with a continued focus on driving sustainable, profitable sales growth. Furthermore, we are also expecting a constant currency sales growth in the high teens in our Latin America business,” it said.