Marico Q4 net profit rises 15% but domestic volume growth disappoints

Consumer goods company Marico's consolidated net profit grew 15% on year to Rs 251 crore in the January-March quarter, marginally better than market estimates of around Rs 240 crore.

Revenue grew 7% to Rs 2,161 crore from Rs 2,012 crore in the corresponding quarter of the previous fiscal year.

Operating margins expanded to 16.4% during the March quarter from 15.9% a year ago, but were lower than 17.9% clocked in October-December.

Volume growth in domestic business was just 1%, but the figure was better at 12% in the international business.

"In India, rising inflation levels, exacerbated by geo-political tensions, continued to weigh down the overall consumption sentiment, and even more so in rural," Marico said.  "Copra prices remained soft, while crude and edible oil prices hardened given the linkage to global markets."

For fiscal 2021-22, Marico's revenue grew 18% to Rs 9,512 crore, while its profit after tax (excluding one-off items) rose 6% to Rs 1,230 crore.

Operating margins contracted 201 bps to 17.8% during the year.

OTHER KEY HIGHLIGHTS

1) The top brand, Parachute rigids, saw a 1% decline in volume in Q4. However, FY22 volume grew 5%.

2) The Saffola franchise, comprising refined edible oils and foods, grew 17% in value terms.

3) Saffola edible oils had a flat quarter in volume terms but grew in double-digits in value terms.

4) Copra prices, the company's key raw material, fell 9% sequentially and 31% on year, providing support to margins.

5) With the onset of the flush season, the company expects copra prices to remain range-bound in the near term.

6) The company expects edible oil prices to remain at elevated levels in the coming quarters.

7) The International business delivered double-digit constant currency growth for the fifth quarter in a row.

OUTLOOK

"In the domestic business, while near term demand outlook is uncertain, we are confident of staying well-ahead of market growth and will continue maintain sharp focus on driving penetration and market share gains," the company said.

The company has pinned its hope on recovery in demand due to good harvest season, normal monsoon forecast and high government spending.

In international segment, the company expects the business environment in the markets it operates in to remain stable and is confident of maintaining the double-digit growth momentum in the coming quarters.

In the near term, it expects margins to be subdued following the renewed spike in commodity prices due to geopolitical tension.

"We expect the stress on demand and margins to ease towards the second half of next year. Over the medium term, we hold our aspiration to deliver 13-15% revenue growth on the back of 8-10% domestic volume growth in the domestic business and double-digit constant currency growth in the international business," Marico said.