Consumption trends remained subdued amid weak rural sentiment and global commodity inflation due to geopolitical tensions
Consumption trends remained subdued amid weak rural sentiment and global commodity inflation due to geopolitical tensions
FMCG Major Marico said Tuesday its domestic business remained relatively resilient in the January-March quarter, helped by “low single-digit” revenue growth and marginally positive volumes.
The company expects “marginal growth” in earnings in the fourth quarter due to higher input costs and higher advertising and promotional spend.
“Consolidated revenue growth for the quarter reached high single digits,” Marico said in its quarterly update for Q4 FY22.
During the quarter, consumption trends remained subdued amid weak rural sentiment and global commodity inflation due to geopolitical tensions, the company said.
“While companies implemented price increases across FMCG categories to cope with cost pressures, ongoing inflation continued to weigh on the wallets of rural and urban consumers,” she added.
Citing a Nielsen study, Marico said FMCG volumes declined year-over-year in the January-February 2022 period.
However, despite the challenging macroeconomic context, business in India “remained relatively resilient, supported by focused execution and market share gains,” Marico said.
“Revenue growth for the quarter was in the low single digits, while volumes were slightly positive on an exceptionally high basis (25%), resulting in double digit volume growth on a 2-year CAGR basis,” it said.
While the international business achieved double-digit currency-neutral growth.
“The company has delivered outstanding currency-neutral mid-teens growth in FY22,” it said.
About commodity prices, Marico said copra prices remained low, but cooking and crude oil prices rose due to geopolitical tensions.
“In response, the Company also made calibrated price increases in its Value-Added Hair Oils and Saffola Cooking Oils portfolios during the quarter. As a result, gross margin is expected to be at a similar level to the same quarter last year.”
Additionally, advertising and promotional spend was higher year over year as Marico continued to invest in strategic branding of core and new franchises.
“With that in mind, we expect modest earnings growth for the quarter,” Marico said.
“This will be followed by a detailed information update once the Company’s board of directors approves the audited consolidated and standalone financial results for the quarter and year ended March 31, 2022,” the company said in a filing.
