FMCG major Marico on Tuesday said its domestic business in the January-March quarter stayed relatively firm, helped by "low single-digit" revenue growth and marginally positive volumes. The company expects a "marginal growth" in profits in Q4 due to a rise in input costs and higher advertising and promotional spending. The "consolidated revenue growth in the quarter touched high single digits," said Marico in its quarterly update for Q4 FY22.
During the quarter, consumption trends remained subdued amid weak rural sentiment and inflation in global commodities due to geopolitical tensions, the company said. "While companies affected price hikes across FMCG categories to cope with the cost-push, persistent inflation continued to hurt consumer wallets across rural and urban," it added. Quoting a Nielsen study, Marico said MCG volumes declined in the Jan-Feb 2022 period on a year-on-year basis. However despite the challenging macro context, the India business stayed "relatively firm, riding on focused execution and market share gains," Marico said. "Revenue growth in the quarter was in low single digits, while volumes were marginally positive on an exceptionally high base (25 per cent), leading to a double-digit volume growth on a 2-year CAGR basis," it said. While its international business delivered double-digit constant currency growth. "The business has registered a stellar mid-teen constant currency growth in FY22," it said. Over the commodity prices, Marico said among key inputs, copra prices remained soft, however, edible and crude oil prices spiked due to geopolitical tensions. "In response, the company also took calibrated price increases in the value-added hair oils and Saffola Edible Oils portfolios during the quarter. Consequently, gross margin is expected to be at similar levels as the same quarter last year," it said.
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Moreover, advertising and promotional spending were higher on a year-on-year basis, as Marico maintained investments towards the strategic brand building of core and new franchises. "In view of the above, we expect marginal growth in profits in the quarter," said Marico. "This will be followed by a detailed information update once the Board of Directors of the company approves the audited consolidated and standalone financial results for the quarter and year ended March 31, 2022," the company said in a filing.
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