The management expects operating margin to improve moderately as input costs have eased and operating leverage benefits are also expected to show
We continue to prefer companies that focus on distribution reach, and deploy internal accruals to invest behind their brands. A sustainable way of doing the latter is deploying internal accruals such as cost savings and utilizing super normal profit from other product groups.
For FY20, Marico has guided at 10 percent volume growth for its India business and over 18 percent EBITDA margin. In constant currency terms, the international business should continue its double-digits growth
In the current year company aims to deliver on annualized basis 8 percent volume growth.
US e-commerce giant Amazon was awarded a patent earlier this week for a system in which a package would be "forcefully" propelled from an unmanned aerial vehicle (UAV) and would be helped to land by tools including a parachute.
Speaking to CNBC-TV18 Saugata Gupta, MD & CEO OF Marico explained the reasons behind the lower-than-estimated volume growth this quarter.
FMCG company Marico's second quarter consolidated profit jumped 18.1 percent year-on-year to Rs 180.6 crore on operational efficiencies while revenue fell 0.7 percent to Rs 1,443 crore.
FMCG major Marico's second quarter profit is seen rising 18 percent year-on-year to Rs 177.2 crore and revenue may increase 2.3 percent to Rs 1,519 crore, according to analysts polled by CNBC-TV18.
"Recovery on consumption will happen with seventh Pay Commission and One Rank One Pension (OROP) being implemented, which will trigger demand and bring the company more volumes," says Saugata Gupta, MD and CEO of Marico.
Analysts say sluggish revenue growth may be due to price cuts announced by the company. It reduced prices of Parachute oil by around 16-18 percent.
Analysts polled by CNBC-TV18 feel domestic business may see 6-7 percent growth while international business is likely to see 9-10 percent jump. However, growth may be at the cost of price cuts and promotions. Steep cuts of 9-25 percent were taken across stock keeping unit (SKUs).
Analysts polled by CNBC-TV18 say price cuts may bear down on revenues while significant correction in input prices may be partially passed on to customers.
Analysts see volume growth at 6-7 percent with 1 percent price/mix led growth and see some pick up in volumes for Safolla & Parachute sequentially.
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FMCG major Marico posted an 18 percent increase in its third quarter consolidated net profit year-on-year to Rs 160 crore on higher revenue growth. The bottomline and operational performance was ahead of expectations while topline met estimates.
Harsh Mariwala, Chairman of Marico, hopes to see some positive rub-off effect of falling crude prices on other commodities also, like coconut oil.
Volume growth, which is the key for any FMCG company, is expected to largely remain sluggish in the quarter gone by. Analysts expect volume growth of 8 percent, which is not a price-led growth. Infact volume growth could surprise on the downside, feel analysts.
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.
Marico, which recently extended its mother brand Parachute from hair care to skin care, has managed to wrest a five per cent market share in the skin moisturising segment competing against heavyweights such as Hindustan Unilever (HUL), Johnson & Johnson, reports Financial Chronicle.
Marico shares surged over 6% on Friday after the company reported strong earnings for the third quarter.