Marico Q4 Results: Profit Up 15%, Easing Copra Prices Cushion Margin

Marico Ltd.’s quarterly profit rose even as a rise in input costs, tepid demand and higher advertising and promotional spending weighed.Net profit attributable to the shareholders of the maker of Parachute hair oil and Saffola cooking oil rose 14.6% year-on-year to Rs 251 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 258.17-crore consensus estimate of analysts tracked by Bloomberg.Excluding the one-offs—like goodwill impairment charge of Rs 19 crore recognised last year arising out of investment in South Africa and a provision of Rs 8 crore realised towards bad and doubtful debt during the quarter under review—Marico's profit rose 8% to Rs 256 crore. Marico Q4 FY22 Highlights (YoY)Revenue up 7% to Rs 2,161 crore, against the Rs 2,175-crore forecast.Operating profit rose 8% to Rs 346 crore, compared with the estimated Rs 359.24 crore.Margin stood at 16% versus 15.9%.Advertising and promotion spend rose to Rs 204 crore from Rs 173 crore.International business posted 12% constant-currency growth, driven by South Africa (20%), Bangladesh (16%), MENA (11%). Vietnam grew 7%.Marico’s domestic business delivered 5% revenue growth, with 1% underlying volume growth on an exceptionally high base of 25%. The flat volume growth comes when the FMCG industry has seen it contract 4%.'In India, rising inflation levels, exacerbated by geopolitical tensions, continued to weigh down the overall consumption sentiment, and even more so in rural,' the company said in a statement. 'As companies resorted to taking price hikes to counter the persistent input cost push, consumers continued to feel the pinch.' During the quarter, Marico took two-three rounds of price hikes in hair oils and edible oils to combat the sharp spike in commodities, mainly crude, the company said in its earnings statement. Copra price deflation, however, helped with margin remaining unchanged over the year earlier, it said.Copra prices were down 9% sequentially and down 31% year-on-year, the company said. 'With the onset of the flush season, prices should remain range-bound in the near term,' Saugata Gupta, managing director and chief executive officer of the company, told analysts over a post-earnings call.Rice Bran oil was up 26% year-over-year and 6% sequentially, following the recent spike in global edible oil prices. 'We expect edible oil prices to remain at elevated levels in the coming quarters,' he said. Crude derivatives such as liquid paraffin and HDPE were up 9% and 19%, respectively, on a year-on-year basis. 'Both are also likely to remain firm in the near term.'Category-Wise Growth (Q4 FY22)Parachute oil volumes fell 1% over Q4FY21 on the high base of 29%Value-added hair oils posted value growth of 3%. The company gained 90 basis points in value market share during the quarter.Premium personal care, contributing less than 5% of revenue, grew in 'high double-digits', with both Livon serums and male grooming growing at over 20% each.The Saffola franchise, comprising refined edible oils and foods, grew 17% in value terms. Saffola edible oils had a flat quarter in volume terms. The food business grew 17% during the quarter and as a result the food portfolio met its revenue target of Rs 450-500 crore in FY22. The company aims to scale this up to Rs 850-1,000 crore by FY24.Advertising and promotion spend, which comprised 9.4% of sales, was 18% higher year-on-year as Marico prioritized investments toward strategic brand building of core and new franchises over margin considerations.Amid the high inflationary pressure, Gupta said the near-term demand outlook remains 'uncertain'. While margins are expected to remain 'subdued' in the near-term following the renewed spike in commodity prices due to geopolitical tensions, he expects the stress on demand and margins to ease towards the second half of next year. 'Over the medium term, we hold our aspiration to deliver 13-15% revenue growth on the back of 8-10% domestic volume growth in the domestic business.'Share of Marico closed 0.17% down before the results were announced, compared with a flat benchmark Nifty 50.

Marico Q4 Results: Profit Up 15%, Easing Copra Prices Cushion Margin

Marico's operating margin came in at 16% versus 15.9% a year ago.

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Marico Q4 Results: Profit Up 15%, Easing Copra Prices Cushion Margin

Marico's operating margin came in at 16% versus 15.9% a year ago.

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