GCPL grapples with sales downturn: Argentina's peso devaluation takes toll on company's performance

The company said that the effect on profit remains marginal. In spite of the difficult circumstances, the LATAM business consistently achieves favorable volume growth.

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26 Aug, 2025 12:21

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Godrej Consumer Products Limited (GCPL) on January 12 reported that the recent devaluation of the Argentine peso will exert a negative mid-single-digit impact on the company's sales

The newly elected Argentinian government has initiated a series of measures aimed at bolstering economic conditions, with a notable move being the deliberate devaluation of the Argentine peso against the US Dollar. This strategic decision, implemented in December 2023, witnessed a substantial shift in the exchange rate, transitioning from 361 to 808.

Read more: Godrej Consumer Products shares sink 5% as Q3 sees low-single digit sales decline

The company has asserted that the impact on profit remains marginal despite challenging circumstances. Remarkably, the Latin American (LATAM) business has demonstrated resilience by consistently achieving favorable volume growth.

Under the leadership of President Javier Milei, the recently elected government in Argentina has made a bold decision to undertake a substantial devaluation of the peso currency. Surpassing 50 percent, this devaluation has established the exchange rate at 800 pesos per dollar. Milei has justified this drastic measure by citing an economic emergency, underscoring the urgency of the situation and asserting that the country has limited time to explore alternative solutions.

Read more: GCPL launches Rs 515-cr manufacturing plant at TN investor meet

Since 2019, Argentina has upheld the strength of its peso by implementing rigorous capital controls. However, this approach has led to a significant discrepancy between the official exchange rate, set at 366 pesos per dollar, and unofficial rates that have surged to as high as 1,000 pesos per dollar.

The company said that the wide-ranging measures implemented by the Argentinian government are forward-looking, aimed at fostering long-term economic growth and, as a result, bolstering consumption. Furthermore, these initiatives are anticipated to improve the availability of foreign exchange, thereby facilitating more seamless economic activities within the country.

Shares of GCPL are trading 0.08 percent higher at Rs 1,156 apiece on the NSE at 1:21 pm.