Marico Q4 net profit up 13.2% to Rs 257 crore

Consumer goods major Marico on Thursday posted an 8% year-on-year growth in its consolidated net profit to Rs 256 crore for the fourth quarter ended March 31, 2022, with an underlying volume growth of 1% in the domestic business. Volume growth on a 2-year CAGR basis remained strong at 12%.

Revenues from operations of the Parachute and Saffola maker increased by 7% year-on-year to Rs 2,161 crore with the domestic business staying steady in a challenging consumption environment and the international business posting healthy double-digit revenue growth.

Marico’s domestic business delivered year-on-year revenue growth of 5% during the quarter. The company said that 97% of the portfolio either consolidated or gained market share and 94% of the portfolio gained penetration, both on the basis of total sales volume for the last 12 months. The international business delivered 12% constant currency growth in the quarter with each of the Bangladesh, South Africa and MENA businesses clocking double-digit constant currency growth.

The company highlighted that in India, rising inflation levels, exacerbated by geo-political tensions, continued to weigh down the overall consumption sentiment, and even more so in rural. FMCG market continued to decline in fourth quarter in volume terms.

For the full year ended March 31, 2022, the company’s volume growth was 7%. Consolidated net profit increased 6% to Rs 1,230 crore in FY22, while revenue from operations increased by 18% to Rs 9,512 crore with both the domestic and international business growing in high teens. Ebitda margin stood at 17.8%, down 201 basis points, solely due to gross margin compression of 409 basis points. Ebitda for the year increased 6% to Rs 1,689 crore.

Marico said it holds its medium term aspiration of delivering 13-15% revenue growth on the back of 8-10% domestic volume growth and double-digit constant currency growth in the international business. The company will aim to maintain operating margin above the threshold of 19% over the medium term, it said in a statement.

Marico’s Ebitda (earnings before interest, tax, depreciation and amortization) during the quarter surged 11% yoy to Rs 354 crore, while the Ebitda margins were up 53 basis points yoy to 16.4% during the quarter. Gross margin continued to improve sequentially and were up about 76 base points for the third quarter in a row. Advertising and promotion spends at 9.4% of sales was up 18% yoy, as the company prioritized investments in brand building for the long term over immediate margin considerations.

Commenting on the performance, Saugata Gupta, MD & CEO said, “The domestic business braved through challenging demand conditions and climbing costs to stay ahead of the overall FMCG market. Meeting of aspirational revenue targets for foods and beardo this year, bodes well for our initiatives to broad base the domestic portfolio. The international business is poised to sustain the momentum. While near term demand outlook is uncertain, we stay focused on doing the basics right and driving sustainable and profitable growth over the medium term. ”

In terms of categories, Parachute Rigids was down 1% in volume terms on the steep base of 29%. In the full year, the brand grew 5% in volume terms, in line with medium term aspirations. Value added hair oils delivered value growth of 3% in the fourth quarter. The Saffola franchise, comprising refined edible oils and foods, grew 17% in value terms. Premium personal care grew in high double digits in the fourth quarter, with both Livon Serums and Male Grooming growing at over 20% each. Beardo crossed the Rs 100 crore exit run rate and Just Herbs scaled up in line with expectations.

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