Godrej Consumer Third Quarter Profit Falls On Higher Costs, But Meets Estimates
Godrej Consumer’s net profit fell 4.6% to Rs 352 crore on higher costs.
Godrej Consumer Products Ltd. registered a 4.6 percent fall in profit for the October to December quarter of the financial year 2016-17, but managed to beat estimates.
Net profit fell to Rs 352 crore from Rs 369 crore in the same quarter last year, according to the company’s stock exchange filing. Analysts tracked by Bloomberg had estimated the bottomline at Rs 328 crore.
Rising Costs
The fast moving consumer goods company’s drop in profit can be attributed to a substantial rise in costs. A weaker rupee translated to a foreign exchange hit of Rs 12 crore compared to a gain of Rs 10.5 crore in the corresponding quarter last year. Finance costs rose more than 34 percent to Rs 39.7 crore, while exceptional gains fell to Rs 2 crore versus Rs 36.3 crore in the base quarter.
Cost of raw materials also rose 8.3 percent to Rs 997 crore.
Total income rose 8.7 percent to Rs 2,486 crore from rs 2,286 crore. Other income stood at Rs 18.8 crore, at the end of the quarter.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 13.6 percent to Rs 517 crore, while EBITDA margin expanded to 20.8 percent from 19.9 percent.
The company expects its growth to normalise over the next few months as the cash crunch in the system eases. The Goods and Service Tax Bill (GST) is also expected to boost consumer demand.
In India, while demonetisation has resulted in some near-term disruptions, we have out performed the overall market with secondary sales growth of 2 percent during the quarter. Our go to market approach has been resilient and dynamic. We have been disciplined in our execution and have worked closely with our trade and retail partners to deal with the situation. We have also invested competitively in brand building and innovations. Through our focus on operation efficiency and judicious cost management, our EBITDA, too, has increased by 15 percent.Adi Godrej, Chairman, Godrej Consumer Products
Revenue from India dwindled marginally, by 0.5 percent to Rs 1,279.5 crore on a yearly basis. Revenue from Indonesia rose 7 percent while that from Africa (including Strength of Nature) grew a robust 42.3 percent.
Shares of the FMCG company rose 1.4 percent to Rs 1,572 after the announcement.