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Aug 03, 2012, 05.18 PM IST
FMCG firm Marico's first quarter net profit rose better-than-expected 46% year-on-year to Rs 124 crore, helped by strong volume as well as value growth.
FMCG firm Marico 's first quarter net profit rose better-than-expected 46% year-on-year to Rs 124 crore, helped by strong volume as well as value growth.
Its revenue in April-June rose 22% to Rs 1,270 crore.
While its volumes rose 14%, value growth was 22% in the quarter.
Analysts on average had expected Marico to report net profit of Rs 112 crore on revenue of Rs 1,228 crore in the first quarter, according to a CNBC-TV18 poll.
Its consumer products business in India grew 22-23% in the quarter, boosted by sufficient pricing power, steady growth in coconut oils market and share gain by Parachute, share gain in value added hair oils, expansion in Saffola's franchise and investments to improve direct distribution, the Mumbai-based company said on Friday.
Marico's gross margin in the quarter was at 27.1%, compared with 21.5% in the year ago quarter.
"The quarter witnessed a sharp decline in copra prices that led to an overall reduction in the input costs. Market price of copra, the input for coconut oil, which accounts for about 40% of the group's raw material cost, was about 38% lower year-on-year," it said.
However, price of safflower oil and rice bran, both used in Saffola cooking oil, were up 46% and 20% respectively.
Marico also raised its advertising and sales promotions to 12.3% of sales in April-June, from 9.3% a year ago.
Marico said it plans to spend Rs 130-150 crore in capital assets this financial year.
While the growth so far has been strong, the company said there is some uncertainty in the business environment with a possibility of an economic slowdown and the likely impact of inadequate monsoon rain.
"Even though FMCG companies marketing items of daily consumption are not affected as much as some other industries might be, there could be an effect on consumer demand especially for items of discretionary consumption in our portfolio," Marico said.
It also feels there could be some impact of high inflation and weak currencies in some of its international markets and thus doesn't expect the first quarter margins will be sustainable for the rest of the year.
But since copra prices have fallen, Marico said it will pass back some of the input cost benefit in Parachute to consumers in select stock keeping units.
It expects volume growth of 7-8% in Parachute in the medium term, and sees volume growth of 15-17% in value added hair oils over next 2-3 years.
In its premium refined cooking oil Saffola range, volumes are seen growing 15% each year. It also aims to scale up the health foods business under the Saffola brand and has aimed for 25% revenues from Saffola will come from healthy foods in three years.
Over the next few quarters, Marico also aims to integrate the brands Set Wet, Zatak and Livon, it acquired from Reckitt Benckiser.
"The annual turnover of the acquired business was about Rs 150 crore during FY12. The Company believes that this business has the potential to grow by 25-30% over the next few years considering its presence in the fast growing male styling and grooming category," Marico said.
It started primary sales of the brands in the second half of June and reported a revenue of Rs 10 crore. The second quarter will be the first full quarter of these brands under Marico and it feels these brands will grow faster than its existing product range in future.
KAYA SKIN CLINIC
In the first quarter, Kaya Skin Clinic's revenue rose 29% year-on-year to Rs 81 crore, but loss at PBIT (profit before interest and tax) level widened to Rs 7.3 crore from Rs 5.58 crore.
This increase in loss was primarily due to a one-time exceptional loss of Rs 4.8 crore on account of proposed sale of Kaya training centre building, Marico said. Advertising spends were also increased.
As a part of controlling costs, Marico said Kaya's training process has now been regionalised, compared with the earlier practice of conducting all India training in Mumbai.
Marico shares closed down 2.9% at Rs 188.10 on NSE on Friday.
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