Marico Limited (Marico), on November 4, reported a 3 percent decline in consolidated net profit at Rs 301 crore for the second quarter of FY22-23 (Q2FY23) as against Rs 309 crore recorded a year ago. On a sequential basis, the profit declined 19 percent from Rs 371 crore earned during the April–June period.
Consolidated revenue for the FMCG major rose 3 percent on-year to Rs 2,496 crore as compared to a revenue of Rs 2,419 crore registered in the year-ago quarter. On a sequential basis, the revenue is marginally lower by 2 percent from the revenue of Rs 2,558 crore recorded in the previous quarter.
“The first half ended on a fairly positive note despite the operating environment bringing little cheer and we are hopeful of a much better performance in the core domestic portfolio in the second half of the year as macro indicators and the base turn more accommodative, while the new engines continue to deliver on their promise”, said Saugata Gupta, Managing Director and CEO, while commenting on the earnings.
Gupta is confident of sustaining the strong and profitable growth trajectory in the international markets and staying resilient amidst uncertainty in some of the markets. “We believe consistent investment in our brands and focus on execution will enable us to deliver competitive volume-led growth and maintain healthy profitability over the near and medium term”.
The company was able to increase its revenues on year with the aid of price increases and reasonable growth in domestic volumes on the back of healthier traction among urban and premium discretionary portfolios. The profitability was impacted mainly due to losses on the translation of foreign currency receivables and higher effective tax rates (ETR).
Among the sales channels, weakness persisted in the general trade, while the rural growth remained tepid as it reeled under persistent inflationary and liquidity pressures. E-commerce grew in double digits.
The international business of the company sustained its double-digit constant currency growth momentum for the seventh quarter in a row. It delivered a turnover of Rs 600 crore with 11 percent constant currency (cc) growth. Bangladesh clocked 10 percent growth in cc terms while the South East Asia business grew 10 percent in cc terms, led by strong hygiene and personal care (HPC) growth in Vietnam. MENA and South Africa grew 11 percent and 16 percent in cc terms.
The operating costs were largely stable with marginal increases of 1-2 percent in advertising costs and other expenses while the cost of raw materials declined 6 percent on year but rose 4 percent sequentially.
From a near-term perspective, “in the domestic business, we will maintain a sharp focus on driving penetration and market share gains across our portfolios aided by distribution expansion, aggressive cost controls, and sufficient investment in market development and brand building”, the company said in its earnings release. “We will closely watch rural growth and are hopeful of a recovery. We expect to deliver mid-single digit volume growth in H2”.
The company believes there are macro risks in some of its international markets but is confident of delivering double-digit growth in the coming quarters.
It sees a sequential improvement in gross margins from Q3 onwards as its main raw material, Copra, remains soft however, volatility persists in other vegetable oils.
The company has given a guidance of 18-19 percent EBITDA margin for FY23.
Marico ended flat at Rs 639.2 on November 4 at the National Stock Exchange. The stock has gained 5 percent during the past one year and has rallied 2.5 percent during the past one month.
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