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FMCGs still battling demand crunch

14-November-2000
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FMCGs still battling demand crunch

A study conducted by Business Standard shows the companies manufacturing food products have performed better than those which manufacture healthcare products. The FMCG companies which could beat the corporate sector in terms profitability are now facing a severe shrink in profit margins on account of cut-throat competition. The growth in net profit of 12 majors declined to 12.32 per cent during the quarter ended September, from a hefty 28 to 32 per cent during the previous three quarters. The impact of the poor monsoon this year would be felt on FMCG companies when the results for 2000-01 is out, say analysts. It is the flexibility and the innovative attitude of Cadbury and Britannia which bucked the trend, they added. Hindustan Lever (HLL), which showed only a single digit growth in sales in six out of seven quarters, is the worst affected among FMCG firms. In fact, HLL's growth rate in sales slipped to 0.42 per cent in the quarter ended September, from 10.8 per cent during the quarter ended June, 1999. Colgate-Palmolive showed a growth in sales of over nine per cent during July-September 2000, compared with two per cent during previous four quarters. Procter and Gamble recorded a marginal 0.67-per cent rise in sales during July-September, against a negative growth during quarters April-June 2000, September-December 1999 and April-June 1999. The food products manufacturers have beaten others with a double digit growth in sales turnover. Britannia maintained a sales growth rate of over 15 per cent during the last three quarters, compared with a meager 4.19 per cent in the quarter ended December, 1999. Cadbury maintained a double digit growth although the rate declined from 27.47 per cent in September-December 1999 to 11.94 per cent during July-September 2000. Nestle came out with a better rate of 12.59 per cent in the quarter ended September and 15.36 per cent in April-June 2000. The company registered a negative growth in sales during the quarter ended January-March 1999 (-8.06 per cent), April-June 1999 (-12.88 per cent) and July-September 1999 (-2.73 per cent).

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