FMCG major Marico on Monday posted Q2 profit at Rs 360 crore, up 17.3 per cent in comparison to Rs 307 crore during the second quarter of FY23, surpassing estimates. It posted revenue from operations at Rs 2,476 crore, down 0.8 per cent on-year, with underlying volume growth of 3 per cent in the domestic business and constant currency growth of 13 per cent in the international business. Marico’s revenue during the second quarter of FY23 was at Rs 2,496 crore. According to a CNBC TV18 poll, Marico posted Q2 profit at Rs 345 crore and revenue at Rs 2,465 crore for the quarter ended September 2023. The company EBITDA stood at Rs 497 crore.
The company also declared an interim equity dividend for the financial year 2023-24 of Rs 3 per equity share of Re 1 each. “As intimated vide our letter dated October 17, 2023, the record date for reckoning the list of shareholders who shall be entitled to receive the said interim dividend shall be Tuesday, November 7, 2023. The Interim dividend will be paid to such shareholders on or before Wednesday, November 29, 2023,” the company said in a regulatory filing.
During the quarter, Marico said, demand trends in the domestic FMCG sector stayed largely in line with the preceding quarter. While urban sentiment improved sequentially, instances of higher food inflation and uneven rainfall distribution led to a slower-than-expected pace of recovery in rural demand. “Packaged foods, given its high urban salience, maintained a healthy growth trajectory and continued to outpace mass home and personal care categories. With commodity inflation largely in check and price cuts implemented across categories, we remain optimistic about a gradual recovery in sectoral volume growth, aided by range-bound retail inflation, onset of the festive season and continued government spending,” the company said in a statement.
Gross margin, meanwhile, expanded by 685 bps YoY and 50 bps sequentially to reach its highest level in 26 quarters, owing to softer input costs. A&P spends were up 26 per cent YoY, up 229 bps as a percentage of sales, as the company remains committed towards strategic brand building of core and new businesses.
Marico’s Q2 performance across markets
Marico’s India business posted volume growth of 3 per cent amidst the given operating environment. Domestic revenue was at Rs 1,832 crore, down 3 per cent on a year-on-year basis, lagging volume growth due to price corrections in key portfolios in the last 12 months. Majority of the portfolio, it said, witnessed healthy trends across offtakes with ~85 per cent of the business either gaining or sustaining market share and penetration. Among the sales channels, modern trade and e-commerce registered high double-digit (+20 per cent) growth, while general trade declined in low single digits on a YoY basis.
Meanwhile, the international business continued its strong momentum and delivered constant currency growth of 13 per cent amidst a challenging geo-political scenario and macroeconomic headwinds in select markets.
Within the international business, Bangladesh registered 2 per cent CCG (constant currency growth) amidst ongoing macroeconomic headwinds. Vietnam grew 13 per cent in CCG terms with a steady performance in both the HPC and Foods portfolios. MENA delivered 34 per cent CCG with both the Gulf region and Egypt growing in double-digits. South Africa posted 23 per cent CCG led by the ethnic haircare segment. NCD and Exports posted 18 per cent growth.
“The domestic and overseas businesses have delivered a fairly resilient performance amidst a challenging operating environment in the first half of the fiscal. We have made substantial progress towards achieving the diversification objective set for the year with Foods and Digital-First portfolios scaling up on expected lines. We are also on-course to deliver robust gross and operating margin expansion this year, even while ramping up brand building investments to strengthen the equity of our franchises. We continue to hold the aspiration of exhibiting an improvement across key performance parameters on a full year basis,” said Saugata Gupta, MD & CEO, Marico.
Q2 performance by Marico product range
The company’s Parachute Coconut Oil registered 1 per cent volume growth amidst subdued consumer sentiment, while the franchise gained ~35 bps in market share on MAT basis. Volume growth on a 4-year CAGR basis was at 4 per cent. Value-Added Hair Oils grew by 1 per cent in value terms, reflective of a slower recovery in mass personal care categories. Value growth on a 4-year CAGR basis was at 4 per cent. “While growth in the bottom of the pyramid franchises was muted, we continued to witness healthier traction in the mid and premium segments. Consequently, the franchise consolidated its market share leadership on MAT basis,” it said.
The Saffola franchise, comprising Refined Edible Oils and Foods, declined 12 per cent in value terms, owing to price cuts in Saffola Edible Oils over the last 12 months.
Foods continued its steady growth trajectory with 25 per cent value growth YoY. The franchise is largely on-course to reach its FY24 revenue aspirations. Saffola Oats grew in double digits and maintained its category leadership while Honey and Soya Chunks continued to scale up well. Newer categories of Peanut Butter, Mayonnaise and Munchiez have also been gaining traction. “True Elements and Plix act as differentiated growth drivers to our Foods play. We will focus on scaling up Foods as we aggressively invest behind market development, strengthen the cost structure, and refine supply chain and GTM strategies,” Marico said.
Premium Personal Care delivered healthy growth and is well on track to contribute ~10 per cent of the domestic revenues in FY24.
Rice Bran Oil (RBO) stayed volatile during the quarter with a 6 per cent QoQ increase, however, was down 23 per cent YoY in-line with the correction in the vegetable oil complex in the last 12 months. Liquid Paraffin (LLP) was down 5 per cent YoY, while HDPE was down 10 per cent YoY.
