New Delhi: Britannia Industries on Monday said it will focus on a double-digit sales volume growth this fiscal year, as the company expects normal monsoons to aid consumption despite a likely rise in prices of wheat and sugar, key ingredients for packaged foods.
“The situation on volume and revenue for the last year, they are almost at par. However, if you look at it by quarter, it’s a very different story. In the last quarter, the volume growth was two times the revenue growth. This year we expect volume growth to be quite solid, barring the entry into the year, which is pretty similar to the year that’s gone by. I would think that post election, post monsoon, we would be aiming towards a double-digit volume growth for sure,” Varun Berry, vice chairman and managing director, Britannia Industries, said during the company’s post-earnings call on Monday.
On Friday, the company reported a 3.1% rise in consolidated sales for the quarter ended 31 March to ₹4,014 crore. Profit fell 3.7% year-on-year to ₹536.61 crore. For the fiscal year ended March, consolidated revenue grew 3.5% to ₹16,546 crore.
In FY24, the maker of Good Day and Milk Bikis biscuits reported a 4% increase in sales volumes.
The company has seen a softening of prices of palm, laminates, and corrugates—overall commodity costs remained soft in the March quarter. However, the company warned of a slight inflationary pressure on wheat and sugar.
“Our outlook on this year is not deflationary, our outlook on this year is slightly inflationary, which is a healthy inflation of 3% or thereabouts. The crop seems to be fine as far as wheat is concerned. The government holding has been reasonably low. So, there is going to be government buying because of their programs. I would think that the wheat outlook is slightly inflationary during the year…Similarly sugar has not been a great crop—it’s not bad, but it’s not as good as last year’s crop. So sugar will be slightly inflationary. We are making sure that we take whatever interventions that are required to get to our planned numbers as far as commodity is concerned,” Berry said.
The company expects commodity inflation to hover at 3% to 4% post-elections in FY25. On Friday, it said it will stay vigilant on commodity prices and the evolving geopolitical landscape.
The company’s comments follow several other large packaged goods makers that are now chasing volume growth after two years of price-led growth. A high inflationary environment had prompted companies to hike prices across the board, resulting in consumers cutting down on purchases of daily goods as well as switching to cheaper competing brands.
However, the trend may now be reversing.
Last week, Nestle India too hinted at ramping up volumes. “My objective is to ensure that, whatever be the market circumstance, I should be in the top quartile of performance. There was a time we had 8% to 9% volume growth, so we have to ramp up,” Suresh Narayanan, chairman and managing director, Nestlé India said during a media roundtable. For the three months ended 31 March, the company reported an underlying volume growth of 5%.
Similarly, India’s largest consumer goods maker Hindustan Unilever Ltd reported a 2% rise in volume growth for the March quarter.
“Volume is a good thing to chase at this time. It is the most virtuous thing to do – to get more consumers, more consumption, and premiumizing them through product mix. That strive is making our company stronger. We are focused at this stage on what we can really control, which is to drive more volume and go to fast-growth spaces,” Rohit Jawa, CEO and managing director of Hindustan Unilever told Mint last month.
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Published: 06 May 2024, 06:41 PM IST