Marico's India biz reports mid-single digit volume decline in Q1

The FMCG major said its India business volumes in Q1FY23 declined in mid-single digits, particularly dragged by a sharp drop in Saffola Oils, while Parachute coconut oil recorded a minor volume decline.

Value added hair oils grew in low single digits in value terms despite weak consumption sentiment, especially in rural. The International business maintained its strong momentum, delivering high-teen constant currency growth. Consolidated revenue in the quarter ended June 2022 was marginally higher on a year-on-year basis, Marico said on Tuesday.

Marico said In India, the sector continued to witness tepid demand as rising retail inflation exerted pressure on share of wallet for FMCG. Current trends indicate that consumers titrated consumption in some non- essential categories and either downtraded among brands or switched to smaller packs in the essential categories. In contrast, premium discretionary categories fared relatively better because of a lower base and lower consumption dip in the upper income consumer segment.

Foods business also had a slow quarter due to high in-home consumption base in oats and sharp decline in immunity-led categories like honey, among others. Premium Personal Care posted robust growth across all segments of the portfolio. Digital-first brands remained on track and met internal aspirations.

Among key inputs, copra prices remained soft during the quarter. Edible and crude oil prices cooled to some extent towards the end of the quarter, but the company consumed higher cost inventory in this quarter.

Gross margin is expected to expand on a year-on year basis, but remain near the same levels as the preceding quarter. A&P spends grew in low teens on a year on year basis, as the company maintained investments towards strategic brand building of core and new franchises.

The company expects operating margin to expand, leading to reasonable operating profit growth on a year on year basis. The effective tax rate (ETR) will be higher by 250-300 bps in FY23 due to expiration of fiscal benefits in one of the manufacturing units. Therefore, net profit growth is expected to lag operating profit growth.

The company maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term, enabled by the strengthening brand equity of its core franchises and scaling up new engines of growth.

Marico is one of India's leading consumer products companies in the global beauty and wellness space. It reported 13.2% rise in the net profit to Rs 257 crore on a 7.4% increase in net sales to Rs 2,161 crore in Q4 FY22 over Q4 FY21.

Shares of Marico were down 0.14% to Rs 491.95 on the BSE.

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