Marico's India Business Volume Declines In Mid-single-digits In Q1

The India business of Marico, the consumer goods company, declined in mid-single digits by volume in the April-June quarter when sales of its Saffola cooking oil brand dropped sharply.

The company’s Parachute coconut oil also recorded a marginal volume decline in the quarter. “In India, the sector continued to witness tepid demand as rising retail inflation exerted pressure on share of wallet for FMCG,” Marico said in its quarterly update.

The company said that trends indicate consumers in some non-essential categories are either picking cheaper brands or switching to smaller packs in essential categories. Premium categories did better because of a lower base and consumption holding among higher-income consumers.

Saffola oils "chose to maintain threshold margins over volumes in the face of unprecedented raw material inflation, supply chain issues and the undesirable effect of price hikes on the absolute outlay for the consumer,” Marico said.

The Parachute brand passed on more value to consumers towards the second half of the quarter on account of steady deflation in copra. The value-added hair oil grew in low single digits in value terms despite weak consumption sentiment, especially in rural India.

Food brands were also impacted due to high consumption in the base quarter of oats and a decline in the immunity-led category like honey among others.

Premium personal care posted robust growth across all segments and digital-first brands remained on track, said the company.

Marico’s international business maintained its strong momentum and delivered higher-teen constant currency growth.

“All markets exhibited strength and stayed on the path of sustained profitable growth, despite the prevailing global uncertainty and inflationary pressures,” the company said in its update.

The company said it expected to see consolidated revenue in the quarter to be marginally higher compared to last year. “We expect operating margin to expand, leading to reasonable operating profit growth on a year-on-year basis. The effective tax rate (ETR) will be higher by 250-300 bps in FY23 due to the expiration of fiscal benefits in one of the manufacturing units. Therefore, net profit growth is expected to lag operating profit growth,” it said.

Copra prices remained soft, edible and crude oil prices reduced to some extent and its advertising and promotion spend grew in the low teens compared to the June-ended quarter last year.

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