Marico's revenue from operations stands at Rs 1,496 crore in Q4 FY20

Marico's operating margin for the India business has improved to 22.8% in Q4 FY20 as against 21.5% in Q4 FY19

e4m by exchange4media Staff
Updated: May 5, 2020 9:17 AM

In the year ended March 31, 2020, revenue from operations was at Rs 7,315 crore (USD 1.03 billion), with underlying domestic volume growth of 1% and constant currency growth of 5% in the international business. EBITDA & PAT (excluding one-offs) grew 11% and 13% respectively.

In the quarter ended March 31, 2020, revenue from operations was at Rs 1,496 crore, down 7% YoY. The company witnessed some encouraging signs in demand in its core portfolios until early March, which sharply diminished amidst COVID19 outbreak as economic activity progressively slowed and adherence to social distancing norms became imperative. The India business recorded a volume decline of 3%, vastly affected by disruptions in the last fortnight of March, due to lockdowns initially enforced in some states and eventually all over the country, to contain the outbreak of COVID-19 in India. In the last week of March, the Company was able to record sales largely in the Saffola Oils and Foods portfolio. But for this disruption, the India business would have delivered low to mid-single-digit volume growth during the quarter.

While overall category growth rates stayed muted, Marico’s core brands continued to gain market shares on a MAT basis. Challenges for the traditional channel in rural and urban mounted during the quarter, while Modern Trade and E-Commerce grew healthily and gained higher salience in the India business. In FY20, Modern Trade and E-commerce contributed to 17% and 5% of the India business respectively.

With the rising consciousness among consumers about personal health and hygiene, the Company introduced Mediker Hand Sanitizer in April’20 in three SKUs – 90 ml, 200 ml, 500 ml for Rs 45, Rs 100 and Rs 250 respectively. Distribution of the range is being ramped up across all channels. The Company also launched Veggie Clean, a first-of-its-kind fruit and vegetable cleaner in April’20. The product will be available across Modern Trade and E-commerce channels in two SKUs - 200 ml and 400 ml for INR 149 and Rs 289 respectively.

With COVID-19 turning into a pandemic, the overseas geographies were also impacted in varying degrees. The International business declined by 6% in constant currency terms with MENA and South Africa businesses posting sharp drops, while Bangladesh and Vietnam still ended in the green, given relatively limited restrictions imposed in these regions in the month of March.

A&P spends in Q4 FY20 at 8.4% of sales, were down 109 bps YoY, largely due to high spends on new products in the base quarter and rationalization of spends on discretionary segments of the portfolio. The Company continued to invest in the core.

While EBITDA was down 4% YoY, gross margins improved marginally by 22 bps. PAT stood at Rs 204 cr., down 3% YoY on a like-to-like basis.

Other Updates:

  • Parachute featured among the ‘The Economic Times Brand Equity 100 Most Trusted Brands 2020’.
  • Marico’s Perundurai unit has been certified as “Carbon Neutral” facility by DNV GL Assurance India Pvt. Ltd and received the Platinum rating as per the GreenCo Rating System by CII-Godrej Green Business Centre.

Marico’s India Business recorded a turnover of Rs 1,146 crore, down 8% on a year-on-year basis. The operating margin improved to 22.8% in Q4 FY20 as against 21.5% in Q4 FY19 despite an unfavourable portfolio mix, partly due to rationalized A&P spends and tighter cost controls.

Parachute Rigids (packs in blue bottles) declined by 8% in volume terms, severely impacted by the lockdown-led disruptions in March. The brand had posted low-single-digit volume growth in the Jan-Feb’20 period on an improved value proposition, as the impending pricing corrections and consumer promotions hit the retail shelves from the beginning of the quarter. The brand strengthened its leadership position with a gain of 268 bps in volume market share (MAT Mar’ 20). Overall, the volume market share of the Coconut Oil franchise consolidated at 62% (MAT Mar’20).

Saffola refined edible oils grew by 25% in volume terms, on a very strong base. While the brand posted healthy growth in the traditional channel, higher salience in the new age channels of Modern Trade & Ecommerce enabled it to further outperform through the quarter. Consequently, the brand gained 350 bps in volume market share brand to consolidate its volume market share at ~76% in the Super Premium Refined Edible Oils category (MAT Mar’ 20).

The Foods franchise posted value growth of 22% in Q4 FY20, led by the Saffola Oats franchise. The value market share of Saffola Masala Oats strengthened to ~86% in the flavoured oats category (Mar’20 MAT), Saffola FITTIFY Gourmet and Coco Soul range performed well in the Jan-Feb’20 period. The Company extended the prototype of Saffola Perfect Nashta to Mumbai during Q4.

Value-Added Hair Oils was down 11% in volume terms, as primary sales plummeted in the last fortnight of March. The mid and premium segments of the category continued to underperform. The Company franchise gained volume and value market share to consolidate at 35% and ~26% respectively.

Nihar Naturals Shanti Amla Badam gained 88 bps in volume share (MAT Mar’20) in the Amla Hair Oils category. Among the newer introductions, Parachute Advansed Aloe Vera Enriched Coconut Hair Oil and Hair & Care Dry Fruit Oil, both now scaled up to a pan-India level, continued to post healthy growth.

Premium Hair Nourishment and Male Grooming declined by 19% and 9% in volume terms respectively, as discretionary personal care portfolios lost favour during the lockdown.

Marico’s International business declined by 6% in constant currency terms in Q4 FY20. The operating margin in the international business stood at 18.0% in Q4 FY20 vs 19.1% in Q4 FY19 due to a significant uptick in A&P spends on new launches.

Bangladesh (49% of the International Business) grew by 6% in constant currency (cc) terms, led by healthy growth in the non-Coconut Oil businesses. For supporting the needs of health and hygiene, Marico Bangladesh launched Mediker SafeLife hand sanitizer and hand wash, bringing Mediker’s international expertise in care and protection to the country.

South-East Asia (26% of the International Business) grew by 5% (in cc terms). Vietnam grew 1%, led by growth in the Foods business. X-Men Go Hand Sanitizer was launched in Vietnam in April.

MENA (12% of the International Business) and South Africa (7% of the International Business) declined sharply. The New Country Development & Exports business grew by 2%.

Commenting on the results, Saugata Gupta, MD & CEO said, “The unfortunate outbreak of COVID-19 and the consequent lockdown has brought about severe hardships to various sections of our society. Marico is committed to working with all stakeholders to make a difference in the lives of those affected. At this time, we are focusing on the movement of food and grocery items of daily use to our consumers, subject to all safety norms. While persistently soft consumption trends have led to muted volume growth in FY20, we have continued to gain market share in our core franchises on the back of our trusted leader brands. We will continue to invest behind our core portfolios, while also adapting to shifts in consumer behaviour that may be brought about by this unprecedented humanitarian crisis. We believe consumer consciousness towards health, hygiene and nutrition could be at an inflexion point, which could be an opportunity for Marico, as it already has a portfolio of brands with a presence in some of these categories. We will continue to innovate with existing and new brands to meet these emerging consumer needs, while aggressively focusing on cost management and cash conservation in order to navigate through these challenging times.”

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