Godrej Consumer’s First Quarter Profit Doubles But Falls Short of Estimate
Godrej Consumer Products misses street estimates on both the topline and bottomline.
Godrej Consumer Products Ltd.’s profit doubled in the April-June quarter compared to the same period last year, helped by lower commodity costs. But, despite the 109.3 percent jump in bottom-line, the company missed street estimates.
Net profit increased to Rs 244.3 crore in the first quarter of financial year 2017 from Rs 116.7 crore in the corresponding quarter last year, it said in a filing to the Bombay Stock Exchange. The Bloomberg consensus estimate stood at of Rs 260.5 crore.
Revenue, or the total income, for the Apr-June quarter grew 6.9 percent to Rs 2,122.8 crore from Rs 1,985.4 crore in the same quarter last year. This figure too missed the Bloomberg consensus estimate of Rs 2,349.2 crore. Sales were impacted by a stretched summer and the late onset of monsoon, resulting in a weak performance in household insecticides.
We are hopeful that the good monsoons in India should lead to a pick up in rural demand later this year. We should also see a boost to consumption in India, following the implementation of the Seventh Pay Commission and the passing of the Goods & Services Tax.Adi Godrej, Chairman, Godrej Group, said in the press release
Earnings before interest, taxes, depreciation and amortisation increased 20.3 percent to Rs 380 crore versus Rs 315.6 crore year-on-year. As a result, the EBITDA margin expanded 25 basis points to 16.14 percent from 15.89 percent.
Other Highlights
Net sales in India remained flat for the first quarter. The revenue share from Africa though, increased 46 percent.
Sales for household insecticides brands like ‘GoodKnight’ and ‘Hit’ saw a 11 percent drop which it attributes to the elongated summer and the delayed onset of monsoon.
Hair colour sales increased by 4 percent led by high double-digit volume growth in Godrej Expert Rich Creme.
Household insecticides sales declined 11 percent and soap sales grew 1 percent impacted by deflationary pressures.
The board has also declared a 100 percent interim dividend of Rs 1 per share.
Subsidiary Amalgamation
In a separate filing, Godrej Consumer informed the stock exchanges that the board has approved a scheme proposing the amalgamation of the two wholly-owned overseas subsidiaries of the company – Godrej Consumer Products Mauritius and Godrej Consumer Products US Holding – with their parent company.
Market Reaction
Shares were trading 1.7 percent lower at Rs 1,606.70 on the BSE.