India business for Marico drops 4% YoY; decline attributed to impact of GST
Marico recorded a turnover of about INR 59 billion (USD 886 Million) through its products sold in India and about 25 other countries in Asia and Africa
Marico has released its Q1 FY18 results. During 2016-17, Marico recorded a turnover of about INR 59 billion (USD 886 Million) through its products sold in India and about 25 other countries in Asia and Africa.
The India Business achieved a turnover of INR 1,328 crore (USD 204 million) during the first quarter seeing a decline of 4% over the same period last year. The volume decline in India was 9% for the quarter. The company attributed the decline to the transitionary impact of GST and the subsequent pipeline reduction in trade especially in rural, wholesale channel and CSD.
The operating margin during Q1FY18 was 21.8% before corporate allocation as against 25.4% (which was much higher than the medium term guidance on the back of a very benign input cost environment) for the same period last year.
The margins also saw a decrease this quarter due to significant increase in the input costs but company chose to hold back the price increase in Parachute Rigids portfolio in the wake of GST roll out. In the near term, the input costs are likely to rise further. The Company plans to revisit the prices in the near term in light of this inflationary trend.
Marico’s rural sales declined by 11% in the run up to GST while the urban sales remained flat in Q1FY18. Sales in Modern Trade (10% of the India turnover) continued the good run with growth of 11%. CSD and Institutional sales (7% of the India turnover) declined by 15% in Q1FY18 due to a complete blackout in June 2018. Recovery in the CSD channel is expected to happen by end of Q2 FY18.
Marico’s International Business achieved a turnover of INR 365 Crore (USD 56 million) during Q1FY18, a growth of 6% in constant currency basis (volume growth of 1%).
Saugata Gupta, MD & CEO, Marico, said, “While the operating performance for the quarter was below par, we continued with our renewed thrust on innovations which is evident from a slew of new launches in India. Market share gains in more than 90% of the portfolio and a satisfactory constant currency growth in the International geographies are positive signs for the long run. We also remain optimistic about a near term recovery in volumes in India. We believe that GST will help organized players in the long run.”
Marico has brands such as Parachute, Parachute Advansed, Saffola, Hair & Care, Nihar, Nihar Naturals, Livon, Set Wet, Mediker and Revive under its umbrella. The international consumer products portfolio contributes to about 23% of the Group’s revenue, with brands like Parachute, Parachute Advansed, HairCode, Fiancée, Caivil, Hercules, Black Chic, Code 10, Ingwe, X-Men, and Thuan Phat. Marico’s focus on sustainable profitable growth is manifest through its consistent financial performance, a CAGR of 10% in Turnover and 18% in Profits over the past 5 years.
Declines in domestic markets continue in comparison to Q1 FY17
In Q1 FY17 the India Business achieved a turnover of INR 1,387 crore (USD 207 million) a value which also had seen a decline of 1% YoY. The healthy volume growth of 8% was backed by continued growth momentum in categories of Parachute Rigid coconut oil, Saffola edible oils and VAHO while Youth business came back on growth trajectory.
Marico’s international business however saw a constant growth last year of 4 percent registering a turnover of INR 367 crores.
During the first quarter, Marico posted Revenue of INR 1,754 crores (USD 262 million). India business (Turnover of INR 1,387 crores) volumes grew by 8% and the international business (turnover of INR 367 crores) grew by 4% in constant currency terms (volume growth of 8%). The Company posted an overall volume growth of 8% for Q1 FY17.
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