Marico Ltd, a leading Indian FMCG company, anticipates a steady increase in the growth of its primary product categories. This growth is expected to be driven by ongoing efforts to boost the profitability of its general trade channel partners and by investments aimed at expanding its presence in both urban and rural markets over the next few years.
In its quarterly report to the Bombay Stock Exchange (BSE), Marico noted that the demand sentiment for FMCG products remained stable in the fourth quarter of FY24. Consumption trends in urban and rural areas largely align with those of previous quarters.
In the fourth quarter, consolidated revenue experienced a modest single-digit growth, returning to positive territory after three consecutive quarters of decline, the company reported. Additionally, the company anticipates a “low double-digit operating profit growth, supported by a healthy expansion in the operating margin.”
“The company reported a marginal increase in volume growth for its domestic business in Q4 compared to the previous quarter, attributed to stabilizing trends across the majority of its portfolios,” the statement read.
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Against the backdrop of improving macro-indicators, Marico stated, “We anticipate a gradual increase in the growth of our core categories. This will be driven by our ongoing efforts to boost the profitability of our General Trade (GT) channel partners and targeted investments aimed at significantly expanding our direct reach in both urban and rural outlets over the next few years.”
The company further stated that it will persist in its efforts to achieve differential growth in urban-centric and premium portfolios by leveraging organized retail and e-commerce channels.
“We will continue to actively diversify our portfolio by accelerating the growth of our food and digital-first brands, while also enhancing profitability in accordance with our medium-term strategic objectives,” Marico said.
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Regarding the Q4 performance, the company reported that its Parachute coconut oil saw a modest single-digit volume growth. This was attributed to an ongoing shift from loose to branded products, coupled with the expected increase in copra prices.
“Saffola oils achieved mid-single-digit volume growth, benefiting from reduced trade-related challenges and stability in input and consumer pricing. However, value-added hair oils experienced a comparatively weak quarter, declining from a high base due to ongoing sluggishness in the bottom of the pyramid segment,” Marico observed.
The Foods segment maintained its consistent performance, ending the year at four times its scale in FY20. Additionally, digital-first brands continued to show robust growth, aligning with the company’s stated objective of portfolio diversification for the year, according to the update.
The international business resumed its double-digit constant currency growth, driven by Bangladesh rebounding from temporary challenges, while the remaining markets sustained their positive momentum, the company added.
“After three quarters of negative growth, consolidated revenue saw moderate single-digit growth, mostly as a result of the incremental anniversary of pricing reductions in important domestic portfolios. In the following quarters, we expect consolidated revenue growth to continue to improve, with domestic revenue growth topping volume growth,” said Marico.
Regarding input costs, Marico mentioned that copra prices slightly increased as predicted, while prices for edible oil and crude oil derivatives remained steady.
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“In this situation, we anticipate significant annual growth in gross margin. In keeping with our strategy goal to consistently increase the long-term equity of both the core and new brands, we also continued to invest in brand creation,” the business stated.
As a result, Marico stated, “We anticipate low double-digit operating profit growth on the back of a healthy expansion in our operating margin, thus staying on track to deliver on the margin guidance for the full year.”
The company reaffirmed its commitment to ” accomplishing profitable and sustainable volume-led growth in the medium term, supported by strengthening the brand equity of its core franchises and scaling up new growth engines.”
