Marico net profit up 3.2 percent in June quarter

Domestic volumes declined 6% year-on-year, led by a double-digit decline in Saffola Oils. Gross margin expanded 401 bps year-on-year, mainly due to moderation in copra prices and favorable mix effect. A&P spend grew 14% on a year-over-year basis as the company maintained investments toward strategic brand building across core and new franchisees. EBITDA margin stood at 20.6%, up 159 bps year-on-year. EBITDA was up 10% year-on-year.

“In India, the FMCG sector witnessed a decline in volumes for the third consecutive quarter in Q1FY23 and the price growth remained value-based. Domestic volumes declined 6% year-on-year, led by a double-digit decline in Saffola Oils. Excluding Saffola Oils, the growth in domestic volume was 1%,” the company said in a statement.

The company’s international business provided 18% constant currency growth during the quarter.

Marico MD and CEO Saugata Gupta said the domestic business faced persistent inflation and weak demand conditions during the quarter.

“In India, despite strong adversity, we have continued to record market share and penetration gains, and delivered operating margin expansion. We expect volume trends to improve once inflationary pressure eases.”

Marico’s India business delivered turnover 1,921 crore, down 4%. The company’s Parachute Rigid portfolio was down 2% in volume terms, driven by softer consumption trends and a very slow conversion from loosely branded.

Value-added hair oil registered a price growth of 5% and traded flat year-on-year volume despite weak consumption sentiment, especially in rural markets.

The Saffola franchise, which includes refined edible oils and edibles, declined 13% in value terms during the quarter. Saffola Edible Oils declined “sharply” in the base quarter on the back of higher domestic consumption, a massive decline from super premium and volume decline in the ROCP (Refined Oil Consumer Packs) category.

“The brand opted to maintain higher volume threshold margins due to unprecedented raw material inflation, muted business sentiment, supply chain issues and the undesirable impact of price hikes on the full outlay for the consumer. In addition, stock limits at retailers and changes in prices on account of lower CSD billing played a role during the quarter,” the company said.

The premium personal care and digital-first portfolio posted high double-digit growth.

Over the medium term, the company maintains its aspiration to deliver 13-15% revenue growth on the back of 8-10% domestic volume growth and double-digit constant currency growth in international trade. The company will aim to maintain operating margin above the 19% range in the medium term.

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