Marico reported an increase of 20.3% in net profit year-on-year for the March quarter to Rs 302 crore despite a modest growth in revenue. Revenue from operations increased marginally by 4% to Rs 2,240 billion.
The company announced its earnings after the markets closed. The National Stock Exchange closed the day with a 0.7% decline in the stock price at Rs 493.60.
The operating profit of the quarter increased by 14% year-on-year to Rs 393 crore and margins increased 153 basis points, to 17.5%.
Owner of the ‘Parachute Oil’ brand saw volumes grow 5% on an annual basis for its domestic business. Volume growth was higher than the 3% growth in the industry for the quarter.
Marico’s FY23 results showed a 6.3% increase in net profit, bringing it to Rs 1,302 Crore. The top line grew by nearly 3% to Rs 9,764 Crore.
Marico, however, is optimistic about the performance of its current financial year due to a rebound in domestic volumes as well as a growth in revenue trajectory.
Marico’s International Business reported an 13% YoY increase in revenue in constant currencies in FY23, compared with 16% growth one year earlier. It expects to maintain the double-digit growth in FY24.
Business Expenditure
Marico’s total costs are more than half comprised of raw material costs. Input costs, as a percent of sales, fell in the March quarter compared to the December quarter. In Q4, it was 52.6% compared to 55% in Q3.
Advertising and promotional expenditure as a percent of sales increased to 9.4% in Q4 from 8.9%.
The percentage of other expenses to sales increased from 11.1% to 12.9% during the fourth quarter.
Business Analysis – India
Marico’s revenue in India rose only 2% YoY, to Rs 1683 crore. Volume growth was down 5% due to price reductions in Parachute Coconut Oil and Saffola Edible Oils in response to falling input prices.
In a press release, the company stated that “However, consistent focus on strengthening brand equity across portfolios and execution translated into 90% of the portfolio either gaining or sustaining market share .”
Parachute Rigids reported a volume increase of 9% amid the normal conversion from loose to branded products, as consumer prices and copra price stability prevailed throughout the quarter.
The value added hair oils finished the year with a positive note, as they saw a 13% increase in their Q4 sales.
Saffola edible oil saw a volume decline in the mid-single figures on a volume base that was sustained during the outbreak last year of the Omicron version of COVID-19. The franchise, however, continued to see healthy growth in offtake during 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 stated.
The company expects revenue to grow gradually as the pricing changes are implemented in the first half-year of FY24.
Business Analysis – International
The international business delivered a stellar quarter as it achieved constant currency growth of 16 %, despite global macroeconomic uncertainties and currency devaluation in certain geographies.
Each region had a solid performance that reflected the strength of businesses.
The company anticipates a double-digit growth rate in Bangladesh over the medium term. This is due to its strong competitive position, and the significant growth potential of the market.
The expansion of the category female personal care is expected to boost the business in Vietnam over the medium-term.
The company plans to protect its core franchise in South Africa of ethnic hair care products and health care for the medium-term.
“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 stated.