Marico Q3FY22 business updates: Slowing consumption patterns affected the sector

5 Jan 2022 , 11:28 AM

Marico on Monday updated on the operating performance and demand trends witnessed during the quarter ended December 31, 2021. Marico says the quarter was characterised by slowing consumption patterns which affected the sector as a whole. This was mainly due to continuing inflation impacting overall disposable incomes as well as rising mobility unleashing some degree of pent-up demand for discretionary goods, services and out-of home consumption.

The stock is currently trading at Rs498.60 down by Rs3.55 or 0.71% from its previous closing of Rs502.15 on the BSE. 

In the India business, the company witnessed similar trends across its categories. Rural demand was sluggish, albeit optical to an extent, given the high base. Revenue growth in the quarter was in double digits, while volumes were flat, owing to the weaker consumption sentiment and a strong base. However, on a 2-year CAGR basis, volume growth was close to its medium-term aspiration.

Parachute Coconut Oil had a muted quarter on a high base. Value-Added Hair Oils posted softer growth in value terms in the quarter, but has delivered double-digit value growth on a 2 year CAGR basis, the company said.

The Saffola franchise grew in the high teens in value terms, led by strong 20%+ growth in Foods, which is on course to reach the Rs5 billion mark in revenues this year. Saffola Edible Oils volumes dropped, largely owing to higher in-home consumption in the base and weak trade sentiment due to fluctuating input prices.

Premium Personal Care posted broad-based double-digit growth. Digital-first brands, Beardo and Just Herbs, also tracked in line with expectations.

The International business delivered high teen constant currency growth on a healthy base. All markets fared positively, led by Bangladesh and a smart recovery in Vietnam.

Therefore, consolidated revenue growth in the quarter was in low teens.

Among key inputs, copra prices were range bound for most of the quarter before witnessing correction towards the end of the quarter. Edible oil prices have also started softening, while crude oil prices remained firm.

The company expect gross margin to improve sequentially, but remain lower on a year-on-year basis. Operating margin is expected to be near the levels of the preceding quarter.

Furthering, the company bid to premiumise the play in value added hair oils, the Company launched Parachute Advansed Onion Hair Oil and Marico Jataa for Men 100% Ayurvedic Hair Growth Oil, thereby broadening its presence in the anti-hairfall segment. Both products have been introduced on the Ecommerce channel.

The Company maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term, enabled by the strengthening brand equity of its core franchises and new engines of growth reaching critical mass.