FMCG major Godrej Consumer Products is expecting sales growth in mid-single digit for the third quarter, and said demand conditions in the economy have been 'subdued' for the past few months, the company said on December 6.
"The standalone business is expected to report around flattish UVG (Underlying Volume Growth) and around mid-single digit sales growth in this quarter," GCPL said in a update on quarterly sales.
"The demand conditions in India have been subdued for the past few months which is evident in FMCG market growth," said GCPL. Despite this, the company has over the past six quarters 'consistently delivered an average organic UVG of ~7%,' it added.
The delayed winters in the North, and cyclone in South India too has impacted the Home Insecticides segment, which contributes a third to the standalone business. However, the rest of the portfolio is showing 'robust performance' and is expected to deliver double-digit UVG.
During Q3 FY24, GCPL had delivered exceptional margins of 29.7%, driven in part by favourable commodity prices. But the current inflationary environment has 'created pressure on the margins', and the company anticipates a 'temporary downward breach' in the margin this quarter, from the normative range.
GCPL, however, added that these 'exceptional situations' are transitionary and not structural, and the management will be able to navigate while maintaining investments for long-term growth. It also said that these 'negative trends are likely to persist for a few months.'
The international business continues to do well, with Indonesia expected to deliver mid-single digit volume growth and high single-digit sales growth.
As guidance earlier, Godrej's GAUM (Godrej Africa, USA, and Middle East) organic business could see volume decline but these effects would be largely completed in Q3FY25.
"We continue to do well on our profitability journey, and this is likely to be the fourth consecutive quarter of healthy EBITDA margins for GAUM," said Godrej Consumer.
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