Consumer goods companies Marico and Godrej Consumer (GCPL) expect low to mid-single digit underlying volume growth in domestic businesses in the December quarter (Q3), as the sector continues to see a slow rural revival.
The companies were giving an update of their business performance for Q3, saying they saw healthy gross margin expansion and were focused on driving operating margin expansion despite investment into market development.
Shares of Marico closed at Rs 545.80 apiece on the BSE on Friday, down 1.45% from the previous close , while GCPL shares closed up 1.49% at Rs 1,219.85 apiece.
“The FMCG sector exhibited similar demand trends on a sequential basis in Q3, with urban markets staying steady and rural offering little to cheer. In addition, constraints on liquidity and profitability in the general trade (GT) channel remained an overhang for the sector, while alternate channels continued to fare well,” Marico said.
The maker of Parachute and Saffola said domestic volumes grew in low single digits on a year-on-year basis with a slight sequential improvement in its core portfolio.
The firm also said it saw consolidated revenue decline in low-single digits on a year-on-year basis, with international business delivering mid-single-digit constant currency growth.
GCPL said the operating environment in India continued to remain similar to Q2. “Despite this, our organic business delivered steady underlying volume growth of mid-single digit. Growth was broad-based across both home care and personal care. Park Avenue and KamaSutra brands continue to perform well and are on track to achieve full-year ambition,” the company said. The firm said it saw reported volume growth in double digits for the period.
At a consolidated level, GCPL expects to deliver mid-single-digit volume growth, double-digit constant currency sales growth, but low-single-digit sales decline in rupee terms due to currency and hyperinflation accounting impact in Latin America (LATAM) and Godrej Africa, USA, and Middle East (GAUM). Reported volume growth of the firm would likely be in high single digits, and reported sales growth would be flattish in rupee terms, it said.
GCPL’s Indonesian business, however, continued to deliver close to double-digit volume growth and high-single-digit constant currency sales growth, it added.
The company also said it plans to restructure trade destocking in a few international geographies in Q4.