Despite a slight growth in revenue, Marico’s consolidated net profit for the quarter ending in March increased by 20.3% year-on-year (YoY) to INR 302 crore. The revenue from operations experienced a marginal rise of 4% YoY to reach INR 2,240 crore.
The company’s earnings were reported after the close of the market, which caused the stock on the National Stock Exchange to end 0.7% lower at INR 493.60.
During the quarter, the consolidated operating profit increased by 14% YoY to INR 393 crore, and the margins expanded by 153 basis points to reach 17.5%.
The owner of the ‘Parachute’ oil brand experienced a 5% year-on-year growth in volumes for their domestic business, which outpaced the industry’s growth of 3% during the quarter.
Marico’s consolidated net profit for FY23 increased by 6.3% YoY to INR 1,302 crore, and their topline grew by almost 3% to INR 9,764 crore.
Despite the challenging circumstances, Marico remains optimistic about its performance in the current financial year, driven by the recovery in domestic volumes and revenue growth trajectory.
Marico’s international business saw a 13% year-on-year growth in revenue in constant currency terms for FY23, compared to 16% growth in the previous year. The company is confident about sustaining double-digit growth in FY24.
Cost Math:
Raw material costs make up more than 50% of Marico’s total expenses. Although input costs as a percentage of sales decreased in the March quarter compared to the December quarter, it still accounted for 52.6% in Q4 as opposed to 55% in Q3.
On the other hand, advertising and promotional expenses as a percentage of sales increased to 9.4% in the March quarter from 8.9% in Q3.
Additionally, other expenses as a percentage of sales slightly increased to 12.9% in Q4 from 11.1% in Q3.
India Performance:
Marico’s domestic revenue saw a modest 2% year-on-year increase to reach INR 1,683 crore, and volume growth decreased by 5%, as the company reduced prices for Parachute coconut oil and Saffola edible oils in response to the declining input prices.
“However, consistent focus on strengthening brand equity across portfolios and execution translated into 90% of the portfolio either gaining or sustaining market share,” the company said in a release.
During the quarter, Parachute Rigids experienced a 9% volume growth, mainly due to the normal course of loose to branded conversions, coupled with the stability of consumer pricing and copra prices.
The year concluded on a positive note for value added hair oils, with a value growth of 13% in Q4, primarily attributed to the increase in volumes.
Saffola edible oils observed a mid-single digit decline in volumes, attributed to the high volume base sustained during the Omicron variant outbreak of Covid-19 last year. Nevertheless, the franchise continued to exhibit healthy offtake growth throughout the quarter.
“In the domestic business, we will drive volume led growth and market share gains across our portfolios, aided by distribution expansion, aggressive cost controls and adequate investment in market development and brand building,” the company said.
Marico anticipates a gradual improvement in revenue growth as pricing interventions take effect in the first half of FY24.
International Business:
Despite facing global macroeconomic uncertainty and currency devaluation headwinds in some geographies, Marico’s international business had yet another exceptional quarter, delivering a constant currency growth of 16%.
The robust performance of each region reflects the fundamental strength of the respective businesses.
Marico anticipates double-digit constant currency growth over the medium term in Bangladesh, driven by its competitive position and substantial growth potential in the market.
Marico expects the expansion into the female personal care category to boost its business in Vietnam in the medium term.
Over the medium term, Marico aims to safeguard the core franchise of ethnic hair care and health care in South Africa.
“The international business has consistently been delivering a resilient performance despite macroeconomic challenges in some of the geographies. We are confident of maintaining the double-digit growth momentum in FY24,” Marico said.
