During the quarter ended March 31, 2016, Marico posted revenue from operations of Rs 1,307 crore, a growth of 7% over Q4 FY15. India business (turnover of Rs 986 crore) grew by 8.4% in volume terms and the international business (turnover of Rs 321 crore) grew by 11% in constant currency terms. The company posted an overall volume growth of 10.5% for Q4 FY16.
EBITDA at Rs 217 crore increased by 26%, while EBITDA margins continued to be healthy at 16.6%. The company has judiciously utilized the benefits of lower commodity prices in improving pricing competitiveness, advertising inputs behind core categories and new products while also improving EBITDA margins. Profit after Tax for the quarter stood at Rs 138 crore, a growth of 26%.
During the quarter, the company sold the Goa plant property which was non-operational for over two years since the plant was shut. The sale resulted in a post-tax gain of Rs 7.5 crore, which is included under “Other Income” in the published financials. The growth in Profit after Tax (excluding this one-time gain) was 19% for the quarter.
Market share gains continued in more than 80% of the portfolio on 12 months MAT basis; almost the entire portfolio in India gained share.
The India business achieved a turnover of Rs 986 crore during the quarter, a value growth of about 4% over Q4 FY15. The business continues to gain market share in more than 95% of the portfolio on 12 months MAT basis. The volume growth in India was at 8.4% for the quarter. The overall sales growth was backed by continued growth momentum in categories of Parachute Coconut Oil in rigid packs, Saffola Oil and Value Added Hair Oils (VAHO) and double-digit growth in Youth portfolio.
The operating margin of the India business during Q4 FY16 was 23.6% before corporate allocation. Higher operating margins can be attributed mainly to gross margin expansion led by softer inputs costs. In the near term, the EBITDA margins are likely to remain in higher band (20- 22%) although the Company would be comfortable with a band of 18-19% in the medium term.
Rural & Urban sales
Marico’s rural and urban sales grew by 3% in Q4 FY16. Sales in Modern Trade (9% of the India turnover) continued the good run with growth of 17% in Q4FY16. CSD and Institutional sales (8% of the India turnover) grew at 12% in Q4FY16. The technology transformation in sales is on track and has started delivering results
In Marico’s International Business, the strategy of focusing on strengthening the core by investing behind capabilities seems to have started showing positive results. This business achieved a turnover of INR 321 Crore (USD 48 million) during Q4FY16, a growth of 11% in constant currency basis. The operating margins (before corporate allocations) were at 14.4% in Q4 FY16 as against 16.6% in Q4 FY15 as the Company invested in brand building. The Company shall endeavour to maintain international margins at ~ 17% and continue to invest and plough back savings to drive growth.
Commenting on the Q4 results, Saugata Gupta, MD & CEO, Marico Industries said, “We continued our journey of delivering sustainable profitable growth this quarter. Deflation and severe drought conditions may make the short term growths in India a challenge. However, with prospects of a good monsoon & consumption pick up in second half of the year, we remain confident of delivering 8-10% volume growth in India and a double digit constant currency growth in International. We will stay the course on investing behind the five areas of transformation and firmly believe that the results will follow.”