GCPL Q1 adjusted net up 31%; sees strong FY13 sales growth

Moneycontrol Bureau

FMCG major Godrej Consumer Products missed street expectations on Saturday with a consolidated net profit of Rs 130 crore in the first quarter, down near 46% year-on-year. The company had an exceptional gain of Rs 175 crore in the year ago quarter.

Adjusted to the year ago one-time gain, Godrej Consumer's profit in April-June rose 31%. Its consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) was up 42% to from a year ago to Rs 208 crore.

The company's consolidated net sales for the three-month period were up 39% to Rs 1,389 crore and it remains confident of strong growth this year, despite the poor monsoon rains.

"A poor monsoon is unlikely to hurt sales given that FMCG products are daily necessities and we continue to see strong growth for FMCG companies going ahead," Adi Godrej, Chairman, told moneycontrol.com.

Analysts on average had expected Godrej Consumer to report a net profit of Rs 150 crore, on revenue of Rs 1,317 crore, according to a CNBC-TV18 poll.

In the first quarter, sales in the Indian sub continent rose 23%, with growth in most categories at much higher rates than market, and in the international business, organic sales rose 31%, with strong growth across geographies, the company said.

"All our operations driven by our 3x3 strategy have performed well despite tough economic headwinds. We are particularly pleased that we have maintained healthy volume growth while continuing to deliver profitable results," Godrej said.

Among Godrej's key business segments, in home care, sales of household insecticides were up 27%. In personal wash, soap sales were up 42%, with a volume growth of 24%, significantly better than the 5% volume growth of the overall soap market. Its hair colour sales were up 5% in April-june.

INTERNATIONAL BUSINESS

In its international operations, sales in Latin America were up 94% to Rs 108 crore, helped by new product launches and consolidation of its operations in Chile.

During the quarter, Godrej Consumer completed the acquisition of 60% stake in Chile-based hair colour and cosmetics company Cosmetica Nacional. Godrej said going ahead, the company will continue to seek acquisitions in three continents - Asia, Africa and Latin America and in three categories - household insecticides, personal wash and hair care.

Cosmetica Nacional, which was acquired in January 2012, was Godrej Consumer's tenth acquisition in the last six years and third in Latin America. Some of its recent acquisitions include a stake in pan Africa Darling Group, Argentina-based Argencos and Issue Group and Megasari in Indonesia.

Sales at Megasari were up 40% at Rs 271 crore in the first quarter, Europe sales were up 17% at Rs 73 crore and Africa sales were at Rs 144 crore.

UK had one of the wettest summers in decades and that affected sales of the sun care category, Godrej Consumer said.

EXPENSES RISE

Last quarter, the company's total expenses rose near 39% year-on-year to Rs 1,210 crore. Godrej Consumer's raw material costs in the quarter were up 15% to Rs 548 crore and employee benefit costs jumped 61% to Rs 129 crore. Its advertisement and publicity spends rose  31% to Rs 153 crore and other expenses were up 40% to Rs 244 crore.

The company's employee costs were higher due to the integration of acquisitions in the quarter, Godrej said. He expects the company's advertising spends will continue to rise given its strong growth across brands and launch of new products like 'Aer' brand of air freshners.

Input costs are also generally expected to rise given poor agricultural production in various countries like the United States and the deficient rains in India.

Godrej Consumer raised prices last quarter to offset some of the raw material cost increases and going ahead Godrej said the company will continue to hike prices when ever necessary.

Godrej Consumer Products shares closed up 0.6% at Rs 636.25 on NSE on Friday.