Godrej Consumer Q2 Results: Profit Rises As Demand Improves

Godrej Consumer Products Ltd.’s profit rose in line with estimates as demand remained steady across categories.

Net profit of the maker of Good Knight mosquito repellent and Cinthol soaps rose 16% sequentially to Rs 478.9 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 495.5-crore consensus estimate of analysts tracked by Bloomberg.

Other Highlights (QoQ)

• Revenue rose 9% to Rs 3,163.7 crore, against the estimated Rs 3,183.7 crore.

• Operating profit rose 10% to Rs 659.6 crore, against a forecast of Rs 700.2 crore.

• Operating margin remained steady at 20.8%. Analysts had pegged the metric at 22%.

• Sales from India business grew 10.6%.

The Godrej Group firm registered a steady growth of 5% and 10% in home care and personal care segments, respectively, according to its investor presentation.

"The sub-categories within home care and personal care saw broad-based growth," said Nisaba Godrej, executive chairperson at Godrej Consumer Products. Within home care, the company said household Insecticides delivered single-digit sales growth, and air fresheners and fabric care witnessed double-digit growth.

Within personal care, growth in hair colour was mainly driven by India performance. The company said it continued to gain market share in soaps.

Year-on-year, the firm reported an operating loss in India. Operating margin contracted 330 basis points to 24.6%, while gross margin fell 830 basis points due to a lag between increase in input cost and product price hikes. Although it was mitigated partly through a decline in employee expenses (160 bps), advertisement cost (250 bps) and other expenditure (100 bps).

Godrej Consumer has seen a rebound in Indonesia, that contributes roughly 16% to its overall business. But it is yet to register a year-on-year growth.

Businesses in Africa, the U.S. and the Middle East grew 16%, while Latin America and SAARC registered a growth of 11% in constant currency terms, the company said.

Godrej Consumer has also witnessed a spike in its sales through e-commerce channels. It expects online sales to contribute around 10% to its total sales in the two-three years from the current 4%.

Shares of Godrej Consumer were trading 2.8% lower after the results were announced.