Godrej Consumer falls on slow Q1 profit growth, margins dip
Angel Broking says the company's Q1 consolidated net profit of Rs 133 crore was, in particular, well below estimates. While Godrej Consumer's tax expenses trebled, higher ad spends and wage hike in Indonesia impacted operating profit margin.
August 05, 2013 / 11:21 IST
Moneycontrol Bureau
Godrej Consumer Products' shares slipped more than 2 percent on Monday morning after the fast moving consumer goods major reported a slow growth in consolidated net profit for the first quarter and the street was also concerned over rise in advertising and promotional spends, which led to a decline in operating profit margin.The Mumbai-based maker of Cinthol soap and Goodknight mosquito repellant on Saturday said its consolidated net profit in the April-June quarter rose 2 percent year-on-year to Rs 133 crore even as consolidated net sales were up 24 percent to Rs 1,720 crore. Operating profit margin was down 149 bps to 12.8 percent, on the back of 54 percent rise in ad spends, and 58 percent hike in workers' wages in Indonesia.The company's tax expenses also trebled in the quarter to Rs 34 crore, which also hurt profit growth."For the first quarter, Godrej Consumer's results were below estimates on the topline, margins and bottomline front," Angel Broking said, adding, the net profit was, in particular, well below expectations.Godrej Consumer expanded its portfolio, launching several new products in the last few months, and the company says it is continuing to back these "innovations" with "strong" marketing investments. And these "aggressive investments" resulted in lower EBITDA growth compared with sales, it added.Further Godrej Consumer said, "The overall market outlook remains turbulent and uncertain. We remain watchful, agile and prudent."At 10:00hrs, Godrej Consumer shares were down 2.3 percent at Rs 842.05 on NSE. Also Read: Coal India falls to record low; earnings lag expectations Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
