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Marico Q2 Results: Profit, Revenue Fall, But In Line With Estimates

The company's net profit declined 13% sequentially to Rs 316 crore in Q2.

A worker organizes packages of Marico Ltd. products at a department store in Mumbai, India (Photographer: Prashanth Vishwanathan/Bloomberg News)
A worker organizes packages of Marico Ltd. products at a department store in Mumbai, India (Photographer: Prashanth Vishwanathan/Bloomberg News)

Marico Ltd.’s quarterly profit fell but was in line with estimates.

Net profit of the maker of Parachute hair oil and Saffola cooking oil declined 13% sequentially to Rs 316 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 301.7-crore consensus estimate of analysts tracked by Bloomberg.

Highlights (QoQ)

  • Revenue was down 4% to Rs 2,419 crore, against the Rs 2,368-crore forecast.

  • Operating profit fell 12% to Rs 423 crore, compared with the estimated Rs 413.4 crore.

  • Margins stood at 17.5% against 19%, exactly in line with estimates.

Volumes, Marico said, grew across home to personal care categories in the quarter ended September.

Discretionary categories and out-of-home consumption visibly picked up.

On a two-year annualised basis—a measure that strips out volatility of the pandemic-hit FY21—volumes grew 9%, the company said. "Despite moderation in pace of growth, rural outpaces urban during the quarter and on 2-year CAGR basis," the company said in a statement.

Parachute, the company said, continues to lead the way. It grew 7% in volume and 18% in value led by increased penetration across markets. Value-added hair oil saw stronger traction in mid and premium segments.

Saffola Foods grew 70%, while edible oils witnessed a muted quarter largely due to volatility in oil prices that led to trade destocking and lower in-home consumption. Marico said it has set a target to achieve Rs 450-500 crore in revenue from the digital-first brand portfolio in two years.

In the international business, Marico delivered 13% constant currency growth, driven by positive trends in all markets, except Vietnam. Vietnam, where a large part of its portfolio is of a discretionary nature, was in the grip of a severe Covid-19 surge and subsequent restrictions, Marico said in an update to the bourses. Revenue rose 3% to Rs. 549 crore sequentially.

On near-term outlook the company said it expects gross margin to sequentially improve in Q3 and Q4 of FY22. It expects to achieve domestic volume growth of 8-10% and sustain gains in market share over the medium term. With 63% market share, Marico is a leader in coconut oil. It's flavoured oats brand—Saffola Oats—comes second with a share of 41%. Raw material inflation and rural sentiment will remain key monitorables.

In comparison, peers Hindustan Unilever Ltd. and Nestle India Ltd., that have witnessed a rise in revenue and profit, termed the current inflationary pressures as “unprecedented”.

Shares of Marico dipped 1.73% after the results were announced, compared with a 1.82% decline in the Nifty 50.