Marico Expects Gradual Uptick In Growth Of Core Categories

Homegrown FMCG major Marico Ltd on Friday said it expects a gradual uptick in the growth of its core categories through ongoing initiatives to enhance the profitability of general trade channel partners and investments towards expansion in footprint across urban and rural outlets over the next couple of years.

In its quarterly update on the BSE, Marico said in the fourth quarter of FY24 FMCG demand sentiment stayed consistent vis-a-vis the preceding quarters with trends in urban and rural consumption largely converging.

In the fourth quarter consolidated revenue grew in low single digits, moving back into positive territory after three quarters, the company said, adding that it expects a 'low double-digit operating profit growth on the back of a healthy expansion in the operating margin'.

"In Q4, the domestic business posted a slight uptick in volume growth on a sequential basis owing to steadying trends in the majority of the portfolios," the company said.

Amidst the backdrop of improving macro-indicators, Marico said, "We expect a gradual uptick in the growth of our core categories through the ongoing initiatives to enhance the profitability of our General Trade channel partners and focused investments towards a transformative expansion in our direct reach footprint across urban and rural outlets over the next couple of years."

The company will continue to focus on driving differential growth in urban-centric and premium portfolios through the organised retail and e-commerce channels, it added.

"We will continue to aggressively diversify the portfolio through the accelerated scale-up of foods and digital-first brands and improve profitability parameters in line with our medium-term strategic priorities," Marico said.

On the Q4 performance, the company said its Parachute coconut oil registered low single-digit volume growth as it witnessed a continuing revival in loose to branded conversions amidst the firming up of copra prices, which was along expected lines.

"Saffola oils delivered mid-single-digit volume growth as trade-led headwinds subsided with input and consumer pricing exhibiting stability. Value-added hair oils had an optically weak quarter, declining on a high base amidst persistent sluggishness in the bottom of the pyramid segment," Marico noted.

Foods continued its steady run to close the year at four times of its scale in FY20 and digital-first brands also sustained its strong growth trajectory, thereby meeting the company's stated portfolio diversification objective for the year, as per the update.

The international business reverted to clocking double-digit constant currency growth, led by Bangladesh bouncing back from transient headwinds and the rest of the markets maintaining their positive momentum, it added.

"Consolidated revenue grew in low single digits, moving back into positive territory after three quarters, due to incremental anniversarisaton of pricing cuts in key domestic portfolios. We expect consolidated revenue growth to trend upwards, with domestic revenue growth outpacing volume growth in the quarters ahead," Marico said.

On input costs, Marico said copra prices inched up in line with forecasts, while edible oil and crude oil derivatives remained stable.

"In this context, we expect strong gross margin expansion on a year-on-year basis. We also maintained investments behind the brand building in line with our strategic intent to continually strengthen the long-term equity of both the core and new franchises," the company said.

Consequently, Marico said, "We expect low double-digit operating profit growth on the back of a healthy expansion in operating margin, thereby staying on track to deliver on the margin guidance for the full year."

The company said it maintains the "aspiration of delivering sustainable and profitable volume-led growth over the medium term, enabled by the strengthening brand equity of its core franchises and scale up of new engines of growth."