FMCGs majors outpace international mkt in FY06

FMCGs majors outpace international mkt in FY06

Author | Source: The Economic Times | Saturday, Jun 03,2006 7:53 AM

FMCGs majors outpace international mkt in FY06

The hype about international markets being key growth drivers for FMCG companies is belied by hard figures. In the last quarter of FY06, the growth in the domestic market of home-grown FMCG majors such as Dabur and Marico has outpaced their growth in the international market.

While the difference in growth rates is not much, the fact remains that growth in the international markets is on a much lower base. Moreover, there was a rupee depreciation in the last quarter compared to the corresponding quarter of the previous year.

Similarly, in the case of MNCs, HLL and Nestle are reporting a drop in overseas revenues. Indeed overseas revenues proved to be a dampener in the otherwise impressive showing by the FMCG majors during the last quarter. Export revenues for Hindustan Lever fell to Rs 275 crore on the back of a decline in castor and beverage sales and also with its increasing focus on value-added products.

Nestle too reported a drop of 22% in overseas revenues mainly on account of lower sales of beverages to Japan and Russia. The export figure fell to Rs 51 crore from Rs 65 crore in the corresponding period of the previous year. Dabur India's international business reported a revenue growth of 19% compared to a domestic sales growth rate of 21.5%.

While markets like Egypt, Middle East and Bangladesh recorded strong growth in revenues, other markets such as Pakistan, CIS, as well as developed markets lagged behind with the company delaying its planned initiatives. Marico's overseas business too lagged behind its overall topline growth of 19% for Q4 FY06. The international division reported 17% growth in net sales to clock a figure of Rs 117 crore.

Even for the year ended December '05, HLL's overseas revenues grew by just 3.5% compared to 10.5% growth in domestic sales on a consolidated basis. Similarly, Nestle too reported export sales growth of just 6.4%, compared to domestic top line growth of 11.8% for FY05, mostly due to lower coffee exports to Russia and decline in turnover from Nepal operations.

However, all this isn't stopping the domestic majors in planning aggressive forays in their overseas business. Dabur expects to spruce up its international business to make it account for 20% of revenues within four years as compared to a 12% contribution at present.

Marico with the relaunch of its newly acquired soap brand Camelia and commencement of distribution of aromatic range of soaps in Bangladesh and streamlining of operations for Gulf is expected to pick up volumes again in the near future.

Tags: e4m

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