Marico Q2 Results: Operating revenue slightly declines but net profit increases 17% to Rs 360 crore.

31 Oct 2023 , 10:53 AM

FMCG giant Marico Ltd reported a 17.26% increase in total net profit for the September quarter of 2023–24, hitting Rs 360 crore on Monday, October 30. Reduced input costs were cited as the reason for this increase. The company reported a net profit of Rs 307 crore for the same period in the previous year. But compared to the previous year, when it was Rs 2,496 crore, the operating revenue decreased marginally to Rs 2,476 crore.

According to Marico's regulatory filing, the company recorded a 13% constant currency rise in the foreign business and a 3% underlying volume growth in the domestic business.

Well-known companies like Saffola, Parachute, and Livon are owned by Marico, which is run by Harsh Mariwala. In the September quarter of 2023–24, total expenses decreased by 3.64% year over year to Rs 2,038 crore, while total revenue for the period was Rs 2,514 crore.

In the domestic market, Marico's revenue dropped from Rs 1,896 crore in the same period previous fiscal year to Rs 1,832 crore in the September quarter, a loss of 3.37%. The domestic FMCG sector's demand trends were consistent with those of the previous quarter, with rural demand recovering more slowly than anticipated as a result of variables like unequal rainfall distribution and food inflation.

'Demand trends in the domestic FMCG industry during the quarter mostly mirror those of the previous quarter. Rural demand recovered more slowly than anticipated, according to Marico, despite successive improvements in urban sentiment. Higher food inflation and unequal rainfall distribution were the main contributing factors to this.

Value-added hair oils increased by 1% in value terms, compared to modest volume growth for Parachute Rigids and Saffola Edible Oils. Marico Packaged Foods kept up its strong growth, surpassing other categories related to personal care.

Marico Packaged Foods, on the other hand, continued to outperform the mass home and personal care categories and maintained a robust growth trajectory due to its high urban salience. 'Foods recorded a 25% YoY value gain, maintaining its consistent growth track. The franchise is mostly on track to meet its revenue goals for FY24,' it said.

Similar to this, its personal care division turned in a 'steady performance,' and in the second quarter, Marico's digital-first portfolio generated ARR (annual recurring revenue) of more than Rs 350 crore. 'The share of Foods and Premium Personal Care was at about 20% of domestic revenues in Q2,' it stated.

Nonetheless, foreign income increased to Rs 644 crore, up 7.33%. 2% continuous currency growth was achieved by Bangladesh despite persistent macroeconomic challenges. With consistent performance in the HPC and Foods categories, Vietnam's CCG expanded by 13%. South Africa reported 23% CCG, and the Middle East and North Africa (MENA) provided 34% CCG, the report stated.

In response, MD & CEO Saugata Gupta stated that despite a difficult operating climate in H1FY24, the domestic and international businesses have produced a reasonably resilient performance.

In the second half of the year, Marico anticipates that revenue growth will become positive on a consolidated basis. 'Considering the performance of H1 and the ongoing tailwinds in input costs, gross margin is anticipated to grow by 350–400 bps, which is more than previously anticipated. In order to support growth, we'll continue to make significant efforts in developing our brand in order to bolster the value of our existing brands and add new ones. As a result, we anticipate a 200 basis point increase in operating margin in FY24,' it stated.

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