Earnings Review
Marico Jul-Sept PAT growth second highest in 17 quarters
This story was originally published at 21:41 IST on 29 October 2024
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--Marico Jul-Sept consol net profit INR 4.23 bln
--Marico Jul-Sept consol net profit INR 4.23 bln vs INR 3.53 bln
--Analysts saw Marico Jul-Sept consol net profit INR 3.83 bln
--Marico Jul-Sept consol revenue INR 26.64 bln vs INR 24.76 bln
--Marico Apr-Sept consol net profit INR 8.87 bln vs INR 7.80 bln year ago
--Marico Apr-Sept consol revenue INR 53.07 bln vs INR 49.53 bln year ago
--Marico Jul-Sept India sales INR 19.79 bln vs INR 18.32 bln year ago
--Marico Jul-Sept international sales INR 6.85 bln vs INR 6.44 bln year ago
--Marico Jul-Sept advertising expense INR 2.90 bln vs INR 2.68 bln year ago
--Marico Jul-Sept cost of materials INR 11.49 bln vs INR 11.06 bln year ago
--Marico Jul-Sept consol EBITDA INR 5.22 bln, up 5% on year
--Marico Jul-Sept consol EBITDA margin 19.6%, down 50 bps on year
--Marico Jul-Sept domestic volume grew 5% on year
--Marico international ops grew 13% in constant currency terms Jul-Sept
--Marico: Bangladesh ops grew 8% in constant currency terms Jul-Sept
--Marico: Consol revenue likely to grow in double digits in Oct-Mar
--Marico: MENA ops grew 43% in constant currency terms Jul-Sept
--Marico: Rural demand grew twice the pace of urban demand in Jul-Sept
--Marico: South Africa ops grew 20% in constant currency terms Jul-Sept
--Marico: Pricing growth positive for sector in Jul-Sept on price increases
--Marico: Parachute coconut oil volume grew 4% Jul-Sept
--Marico: Coconut oil portfolio supported by price hikes
--Marico Jul-Sept coconut oil value growth 10% on year
--Marico Jul-Sept Saffola edible oil volumes flat on year
--Marico Jul-Sept Saffola edible oil value growth 2% on year
--Marico: Saffola edible oil pricing growth positive after 8 qtrs
--Marico: Value-added hair oils declined 8% in value terms in Jul-Sept
--Marico: Saffola brand implemented price increase of around 15% recently
--Marico foods business value grew 28% on year in Jul-Sept
--Marico:Forecasts for most commodities indicate an upward bias in near term
By Steffy Maria Paul and Jahanvi Kothari
MUMBAI – Fast-moving consumer goods company Marico Ltd. posted a higher-than-expected consolidated net profit for the September quarter. Marico reported a consolidated net profit of INR 4.23 billion for the latest quarter, up 19.8% from INR 3.53 billion a year ago, and higher than INR 3.83 billion estimated by analysts. This is the second highest on-year growth in the consolidated net profit for Marico in the last 17 quarters.
The company reported a consolidated revenue of INR 26.64 billion for the quarter, up 7.6% from INR 24.76 billion a year ago. The Street had estimated the company would post consolidated revenues of INR 26.75 billion for the quarter. Sequentially, Marico's consolidated net profit fell 8.8% while consolidated revenue was up only 0.8%.
For Apr-Sept, the company reported a consolidated net profit of INR 8.87 billion, up 13.7% from INR 7.80 billion a year ago. For the half year, the company reported a consolidated revenue of INR 53.07 billion, up 7.1% from INR 49.53 billion a year ago.
Marico's other income for the quarter more than doubled to INR 820 million from INR 380 million a year ago. This is the highest on-year growth in other income for Marico in the last five quarters after the company's other income grew 171% on year in Apr-Jun 2023. The raw material cost during the quarter was INR 11.49 billion, up 3.9% from INR 11.06 billion a year ago. This is only the second quarter that Marico's raw material cost has grown on a year-on-year basis after it fell for eight consecutive quarters between Apr-Jun 2022 and Jan-Mar 2024.
The company's cost for purchase of stock-in-trade was INR 2.56 billion, up 12.3% from INR 2.28 billion a year ago. The company's advertising and sales promotion expense for the quarter was INR 2.90 billion, up 8.2% from INR 2.68 billion a year ago.
Marico's revenue from its domestic operations for the September quarter was INR 19.79 billion, up from INR 18.32 billion a year ago. The company's pre-tax and interest profit from its domestic operations was INR 3.92 billion, up from INR 3.76 billion a year ago. For the six months ended September, the company's revenue from its domestic operations rose 7.7% while the profit before tax from the operations was up 4%.
The hair oil maker's revenue from its international operations for the latest quarter was INR 6.85 billion, up from INR 6.44 billion a year ago. The company's profit before tax and interest from its international operations was INR 1.75 billion, up from INR 1.50 billion. For the half year, the company's revenue from its international operations rose 5.6% while the pre-tax and interest profit from the operations was up 12.4%.
In the September quarter, the domestic revenue was up 8% on year as the volume growth was supplemented by price hikes in the Coconut oil portfolio and a favourable reversal in the pricing cycle in Saffola oils, the company said. The domestic sales volume grew 5% on year as well as sequentially.
The company said it witnessed stable trends in India with rural demand growing twice the pace of urban demand on a year-on-year basis. In the near term, the company forecasts for most commodities indicate an upward bias. Marico will continue to exercise its pricing power within its key franchises to deal with input cost pressures during the year, it said.
The company expects its consolidated revenue growth to move into double-digits in the second half of the current financial year. Marico aims to maintain the double-digit constant currency growth of its international business over the medium-term. Marico aims to double its foods portfolio by end of March 2027 from FY24 levels. The company is also aiming for double-digit EBITDA margin for its digital-first brands in FY27.
The company's consolidated earnings before interest, taxes, depreciation, and amortisation for the latest quarter rose 5% on year to INR 5.22 billion. The company's EBITDA margin fell by 50 bps to 19.6% in the latest quarter.
In an earnings presentation to investors filed with the bourses, the company said that coconut oil brand Parachute, which alone accounted for 33% of its domestic revenue, registered a 4% growth in sales volume and 10% growth in value. The edible oil brand Saffola, which contributed 18% towards Marico's domestic sales, saw flat volumes on year while its value growth was 2%. Pricing growth of Saffola turned positive after eight quarters as the brand implemented price increase of around 15% during the quarter in response to the sharp hike in import duties on vegetable oils recently. Other value added hair oils such as Hair & Care and Nihar, which accounted for 20% of the company's domestic sales, declined 8% in value terms.
In the presentation, Marico said that the strong scale-up in its foods division continued in the Jul-Sept quarter, with an annualised run rate of INR 10 billion, and had 28% growth in value. For Apr-Sept, the personal care division, comprising serums, male grooming, and skin care products, registered an annualised run rate of INR 3 billion. On Sept. 30, the company's digital-first brands division registered an annualised run rate of INR 5.25 billion.
In case of international operations, the company registered an 8% constant currency growth in Bangladesh with a healthy growth in core and new franchises. In South Africa, the company saw constant currency growth of 20% with an all-round growth in hair care and health care division. In West Asia and North Africa, the company reported a revenue growth of 43% in constant currency terms with a robust growth in the Gulf and Egypt. In Vietnam, revenue grew 7% in constant currency basis with demand recovery underway in hair care and personal care segment.
Overall, Marico's international operations revenue grew by 13% in constant currency terms in the September quarter. However, the revenue contribution from Bangladesh towards its international business has been on a decline since FY22 and fell to 44% from 51% three years ago. It is expected to fall further to 40% by FY27.
Marico reported its earnings post market hours. On Tuesday, the shares of Marico closed at INR 629.15 on the National Stock Exchange, down 0.8%. End
Edited by Akul Nishant Akhoury
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