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FMCG’s fast moving once again

FMCG’s fast moving once again

Author | Source: The Economic Times | Friday, Nov 03,2006 9:27 AM

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FMCG’s fast moving once again

The FMCG sector is living up to its 'fast moving' tag again, with the top 15 FMCG companies clocking sales and profit growth of 23% and 12% respectively for quarter ended September '06 compared with the previous corresponding period.

Double-digit volume growths across personal care, branded foods and beverage categories helped the industry register more than double the 10% topline growth recorded during Q2 FY06. Also picking up of export demand and growth in overseas subsidiaries added up significantly to the overall growth rate. However, increased input costs and price hikes in key commodities like vegetable oils, wheat, sugar and milk proved dampeners for the bottomline.

ITC continued its good run in both the tobacco and non-tobacco FMCG segments with topline growth rates of 14% and 53% respectively. Hindustan Lever too reported a healthy 12% net sales growth rate, backed up by 11% volume growth.

Ruchi Soya posted an impressive net sales growth rate of 62%, followed by Godrej consumer and Marico at 48% and 37% respectively. Tata Tea, Dabur India and Britannia Industries too notched up topline growth rates of more than 20%. Gillette India was the only FMCG major to report a net sales decline while Nestle, Colgate and GSK CHL all registered growth rates in 15-20% range.

The branded food segment was among the top movers with ITC and HLL's processed and packaged food segments growing at 54% and 20% respectively. While HLL's food division grew at 11% led by Kissan and Knorr brands, ITC expanded its market share under the Sunfeast and Ashirwaad brand umbrella. Dabur foods too posted an impressive growth of 27%. Britannia recorded an overall growth of 24% as compared to 4% in Q2 FY06.

The beverage category, however, moved slowly with HLL reporting just 6.5% growth. Nestle and Tata Tea's domestic sales grew 14% and 7% respectively. But they made up for it on the overseas front, with Nestle's exports and Tata Tea's overseas revenues both growing at around 35%.

Marico and Dabur's international business grew at 57% and 31% respectively while Godrej Consumer's subsidiaries Keyline and Rapidol added Rs 50 crore in turnover for the quarter.

In the personal care category, HLL's soap & detergent division grew at 12% as compared to 17% growth by Godrej Consumer while Nirma lagged behind with 8% overall growth rate. Colgate's toothpaste and toothbrush categories grew at 10% and 26% respectively, while Marico's hair oil franchise posted a 33% increase. Selective price hikes, innovative marketing campaigns and consumer promotions led the brand growths for most of them.

While higher input costs were offset by marginal growth in employee costs and check on overheads for most of the companies, Britannia and Nirma reported a decline in net profits for the quarter. However, it didn't deter the companies from pushing their ad spends with HLL and Colgate reporting hike of 42% and 57% respectively.

The overall operating margin came down to 18%, from around 19% last year. PAT margins too fell by 150 basis points due to firming up of interest costs.

Tags: e4m

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